The Error saving blueprint

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The New Year means starting fresh habits, and while some people may be hitting the gym or trying dry January, others may be looking to boost their financial health.

Whether that’s kickstarting a new savings plan or trying to repair some dents in a savings pot made to cover the cost of rising bills, getting into the habit of putting money away can help in the long run – even more so than having a significant pot to start with.

Emma-Lou Montgomery, associate director for personal investing at Fidelity International, says: “Starting to save is an excellent way to kick off the year, and it doesn’t matter how much you set aside, just a few pounds a week or even a month can get you into a good pattern and set you off on a savings journey in 2023.

“Before you start on this journey there are a few things to consider.”

1. Have a goal in mind

“Having a goal in mind can be a big savings motivator,” says Montgomery. “Budgeting can sometimes feel a bit of a love-hate type of thing, but if you know what you are saving for, it can help keep you on track.

“It might be a weekend away, setting aside a few pounds for a birthday celebration, or longer-term goals like saving an emergency pot of money or for a house deposit.

“Write these goals down, consider your timeframe and think how much you want to save towards them in 2023.”

2. Think about where to save

“There are a few options, but they fall broadly into two camps: plain and simple cash and investments, or stocks and shares,” says Montgomery.

“Cash is a good option if you are saving for the short term or might need access to your money quickly.

“Savings rates have improved recently due to the rises in the base rate, but with inflation also high, bear in mind the money you have saved won’t stretch so far right now.”


People may want to consider investments if the money won’t be needed in the short term.

Montgomery adds: “While you can’t access money invested in the stock market immediately, investing allows you to grow your money far more potential.

“Of course, there are no guarantees and bear in mind that because your investments can rise and fall, investing is better suited to medium to long-term goals.”

3. Don’t worry about starting small

Montgomery says: “It can be easy to think that you need to start with lots of money when it comes to saving towards significant financial goals.

“But the truth is that you don’t need hundreds of pounds to put away each month. You can start small. Small sums saved or invested today can make a big difference to your financial well-being in the long term.

“Some savings accounts allow you to start saving from just £1.”

4. Make your savings habit automatic

“Once you’ve decided what to save for, and where to save your money, set your savings up so they happen automatically,” Montgomery suggests.

“It might involve setting aside a few pounds as soon as you get paid or at the start or end of each month.

“Whenever suits you, set up a standing order so it’s done automatically, giving you one less thing to worry about. And of course, you can top up with any additional savings you want to make throughout the year.”

5. Review your habit regularly – and don’t be too hard on yourself if you need to dip into your savings

Your spending will change throughout the year, so flex your savings habits as you need to.

Rising living costs may increase the likelihood of being hit by an unexpected bill – which means you need to dip into your money.

Montgomery adds: “Don’t worry if you slide off track or need to adjust your goals to meet the changing demands on your money – this is about long-term goals, so any blips should be seen as just that. The end goal is what you need to stay focused on.”

6. Be savvy with your allowances

Montgomery says it’s worth being aware of annual allowances such as those for Isas (individual savings accounts).

Currently, adults can save up to £20,000 in Isas annually tax-free.

Savers can earn up to £1,000 of interest and not have to pay tax on it, depending on which income tax band they are in. This is known as the personal savings allowance.

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