Kickstart the New Year with fresh goals and watch savings grow like never before

The start of the new year is a great time to start saving, or increase the amount we’re putting away.

Not only is it a good opportunity to start good money habits, interest rates are higher than they’ve been for a while.

Now there are savings accounts offering 5% or more. Getting 5% interest on savings means our money grows faster without you doing much. So if we save £100, we’ll earn £5 in a year, making it a smart way to build our cash.

Save First, Spend Later

If we can afford it, setting up a regular payment into a savings account is a great habit. One easy way to save is by setting up an automatic payment right after payday. By paying ourselves first, we don’t have to think about saving—it just happens. Even small amounts add up over time. With higher interest rates, our savings will grow faster.

Find the Best Rates

We should shop around and check for the best savings rates. Websites like Money Saving Expert Money Saving Expert can show regular updates so we don’t miss out.

As well as the interest rate, we should look at how quickly we can take our money out if we need it. Easy access generally means we can take our savings out straight away. But on the flip side we’ll probably earn more interest from ‘notice’ accounts.

For some ‘fixed term’ accounts, we’ll need to keep our money in the bank for the entire fix period.

In return, we’ll get a fixed amount of interest and won’t be at the mercy of interest rates, which can go down as well as up.

Cut Back on Spending

Cutting back on small, regular costs can free up more money for saving. By cancelling subscriptions we don’t use or making coffee at home instead of buying it, we can save more. Those little savings add up quickly, and with higher interest rates, our money grows faster.

Keep Savings Safe

Lastly, make sure our savings are in FSCS-protected accounts. This means our money is safe if the bank goes under, up to a whopping £85,000.

Fixed-term accounts offer a good way to lock in interest rates for a set period, so we don’t have to worry if rates go down. Just make sure we won’t need the money until the term ends.

Image: Joslyn Pickens / Pexels

_{Article updated December 2024.}