Saving
Moving towards your goals
At its heart, saving provides financial security, freedom, and protection against money emergencies. And having savings can help you to improve your financial wellness and reduce stress in your life.
Establishing and working towards your savings goals can help you feel better prepared for those important moments in life, such as buying a house, helping family members, or affording the retirement you want.
Have you thought about your long term financial goals?
We found that 94%* of people we asked said that being financially comfortable in retirement is one of their long term financial goals.
*The Fidelity Global Sentiment Survey, 2023
Get to know your goals
Understanding your goals is important, as it may help you to stay focused. So when starting to save, the first step is knowing what you’re saving for. It could be simply for peace of mind or:
Buying a home
Whether you're buying your first home or moving home.
A special event
Like a wedding or important birthday.
Retirement
To give yourself a financially comfortable retirement.
Refurbishing or renovating your home
Like painting the kitchen or installing a new boiler.
Holidays
From an annual trip to a once in a lifetime experience.
Starting a family
Helping to cover the costs of your bundle of joy.
When you are thinking about saving, it’s important to know why you’re doing it. You might have some shorter-term goals that are relatively straightforward – getting your emergency savings in place, for example, or planning for something special, such as a wedding, a holiday, or a new car.
For the longer-term goal of building retirement savings, you’ve already made a great start by saving into your workplace pension. Retirement might feel like it’s a long way off, but caring about your pension now might make it the biggest investment in yourself and your future.
Short and medium-term goals are things you plan to do within the next five years
For these goals, it’s important to know what you’re saving for and when you aim to achieve your goal.
It can be a good idea to keep your savings separate from your day-to-day money and bank accounts. By keeping the money separate it will help you to make sure you don’t accidentally eat into your savings and thereby extend the length of time it’ll take you to meet your goals.
There are a number of different types of accounts you could use to save into, including savings, regular saver, and cash ISA accounts. You should investigate which type of account would be best suited for your needs and circumstances.
Top Tip: Pay yourself first
You could set aside money every time you get paid or use an app to round up your spending and put loose change into a savings account. The key is to make it a habit. Having goals and saving towards tangible things and knowing how much you need to save each month is a great way to stay motivated.
Goals that are over five years or more in the future.
When it comes to achieving your long-term goals, the earlier you start putting money aside, the more time it will have to grow. This is a way of supercharging your savings using the power of compounding. Put simply, it means you can potentially benefit from investment growth that has already built up on your savings. This will accumulate over time and could turn a small sum into a significant amount. It’s important to remember that with all investments, the value of them can go down as well as up, and you may not get back what you put in.
Top Tip: Supercharge your savings
One way you can potentially increase your long-term savings is by looking at how much you’re saving into your workplace pension. By increasing your monthly contribution by an extra 1% of your salary, you could boost your pension pot for retirement. Because it’s a small amount, finding the extra money doesn’t have to mean big sacrifices. And as you are already saving into your workplace pension, you may not even notice the extra 1% going out of your salary. Remember, it’s not normally possible to withdraw money from a pension product until you reach age 55, which is due to rise to 57 in 2028.
Maximise free money
That’s right! It’s worth remembering:
- Your employer will usually make regular payments into your pot on your behalf. And, you may also make regular contributions from your salary. They may also offer to contribute more if you do as well. This is called an ‘employer match’. If these extra contributions are available to you, why not take advantage of them to help grow your savings even more?
- The government offers pension tax relief to encourage you to put money aside for your retirement, and is one of the benefits of saving through a pension. When you get tax relief, money that would otherwise have gone to the government as tax goes into your pension account instead. This doesn’t mean you won’t have to pay tax on that money when you withdraw from your pension in the future, simply that you don’t have to pay income tax on it now. Remember, the amount of tax you pay and whether you are eligible to invest in a pension will depend on your personal circumstances. All tax and pension rules may change. You can find out more about how pension tax relief works and how much you could be entitled to.
How to boost your retirement savings
Know what you need
Do you know how much savings you’ll need to support the lifestyle you want in retirement? Use our retirement calculator to find out if you’re on track to meet your retirement goals.
See how much you've already saved
Checking how much money you’ve already put away for retirement can help you feel more confident about the progress you’ve made. Log in to PlanViewer to see how you’re doing.
A little extra goes a long way
Use our calculator to see how a small change to your contributions today can make a big difference to your pension pot tomorrow. Even an extra 1% could supercharge your savings.
A quick summary on saving
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Create savings goals, work out what you need to save and by when, and pay yourself first
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Meet your match and check if your employer will contribute more into your pension if you do
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Remember, a small increase to your retirement savings today, could make a big difference tomorrow.
*The Fidelity Global Sentiment Survey, 2023. The data collection, research and analysis was completed in partnership with Opinium, a strategic insight agency. Data collection took place between 3rd July and 18th July 2023 and includes a sample of 1000 UK adults.