When we think of maximising our savings, we tend to focus on improving the interest rate we are getting on our money, but if you take this premise just a little further, you can seriously boost the amount of money you have to put away each year.
Promotionalcodes.org.uk generated some interesting statistics this month, which showed just how much we are spending on things we may not even think about.
- Buying a coffee at £2.60 every working day of the year costs a staggering £676 in 12 months.
- A Netflix subscription at £8.99 per month adds up to £107.88
- While Spotify at £9.99 per month costs £119.88 a year
- Gym membership at £20 per month – which frankly seems pretty cheap – adds £240 a year to your bill.
- Having a takeaway on a Friday night with an average cost of £10.49 adds up to £545.48 per year
- Buying yourself a meal for every working day each year racks up a massive £780 over 12 months.
These are just some of the luxuries we indulge in almost without thinking on a daily basis and while we don’t want you to live too frugally, cutting back a bit could boost your savings income in the longer term.
If you put this money into the best-paying accounts right now, you would get a pretty decent return. For example, the FlexDirect Current Account with Nationwide is paying 5% gross, so you would earn £123.46 in interest over the year, giving you £2,592.70.
However, after the first year, this rate would reduce to 1%, so while you need to keep being disciplined about your spending to ensure you are keeping the money you would have lost in your own pocket, you also need to be disciplined about making it work harder for you.
So, that means moving it to a better-paying account when you get to the end of the term on the FlexDirect account.
Finding the next best-paying account will largely depend on your circumstances – do you need to access the money easily or can you afford to tie it up? Can you put all of that money aside or do you need to spend some of it?
If you need to access the money at any time, then currently the best easy access account is Ulster Bank’s eSavings account, which is paying 1.25% gross.
But if you can tie that money up, then you can get 1.90% with Shawbrook Bank on its one-year fixed-rate bond, rising to 2.50% with Vanquis Bank if you can leave that money alone for five years. This would pay you £62.50 a year in interest on the same amount of money.
We’re not suggesting that you should suddenly ditch all of your favourite treats but, if you could pull off this kind of personal saving each year for five years, you would have nearly £13,000 extra sitting in your accounts, largely for the sake of making a coffee before you leave home and taking a packed lunch with you. Surely that is worth considering?
And finally, having made these sacrifices, make sure you make your savings work as hard as they can by never missing out on the best rate. Sign up to our free Rate Tracker Service today and we will notify you when a better rate comes up that you can switch your account to.
Call us today on 0800 321 3581 for more information.