Saving money is, on the face of it, a straightforward thing to do. You cut back on non-essential spending, and commit the money you don’t spend toward the right savings pot.

In practice, however, things might not be quite as straightforward as they first appear to be. How do you distinguish between non-essential and essential spending? What’s the best place to store your money? Where does investment enter the equation?

Let’s take a practical look at a few ways to drive down your spending, and drive up your savings.

Review Changes to Household Expenses

Recent budgets have seen a rise in several kinds of living costs. National insurance contributions made by employers have gone up, which has contributed to wages stagnating and employment flatlining. The costs of rail travel, energy, and food have all increased, too. This has meant that household budgets have come under greater pressure.

Coping with this pressure means being aware of your daily budget, and making adjustments wherever necessary. In many cases, you can cut back on spending by simply shopping around for the best available deals, and by using price comparison services.

Same day loans and credit cards for bad credit can offer a short-term solution to financial problems – but if you don’t have a good plan for paying back what’s owed, they can also be a path to trouble.

Strategies for Maximising Savings

Not all savings accounts are created quite alike. In most cases, you can optimise the tax you pay with the help of a cash ISA, which will allow you to contribute up to £20,000 annually, tax-free, until the end of the 2026/27 tax year.

The best way to save is often automatically. Arrange for the money to come out of your account every month, and treat it like an unavoidable expense. You should also try to avoid common savings pitfalls and compose a budget for your monthly spending.

Leveraging Government Schemes and Support

Some people are entitled to free support from the state. If this is you, it makes sense to lean into the support you’re given. If you’re a working parent, for example, make sure that you’re claiming all of the free childcare you can. You might also come to a salary sacrifice arrangement with your employer, so that you can trade cash for non-cash items, like vouchers. This will often lead to a reduced liability when it comes to National Insurance and Income Tax.

Understanding Savings Trends and Behaviours

Adults in the UK have an average of around £16,067 available in cash savings. The figure is substantially higher for men (£20,810) than for women (£11,432). Around two-fifths of adults in the UK have less than £1,000 in savings.

If you want to understand how much you should be saving, it’s rarely a good idea to consider other people whose real financial circumstances might differ markedly from your own. Instead, set up a portion of your budget for long-term saving. This might be 10-15%, depending on your preferences.