Five thrifty tips to help you start saving and investing

25th January 2017 by Darius McDermott

One of the common barriers to saving and investing is that people simply don’t have any spare cash at the end of the month. Their wage is used up on the necessities in life – like feeding their family and putting a roof over their heads. It’s hard to argue with those priorities!

With inflation now nudging closer to the 2% target, it’s only going to get harder, right? Wrong. Some small changes could have a bigger impact than you think and there are loads of ideas that might help you to start a modest monthly savings habit.

I did a quick vox pop in office and here are five thrifty tips from my colleagues:

  1. Move to online grocery shopping. You can easily save about £20 a week on the family shop, as you don’t impulse buy or mistakenly buy things you already have. If you still like the in-store experience then get your spices from the ‘World Food’ aisle, rather than the usual aisle, as you generally get more for less.
  2. Loyalty isn’t necessarily rewarded. Call your TV/broadband/phone provider at least once a year and ask what deals they have going – they rarely advertise any for existing customers, but it is amazing what you are offered if you ask. There are also now good TV services available that don’t tie you into a contract – you can buy as you go and change preferences to a daily, weekly or monthly basis. You can also query insurance renewals if they increase without any seemingly good reason. Savings made by one colleague already this year: £12.50 a month.
  3. Don’t be ashamed to buy second-hand or recycle. There are loads of local Facebook ‘for sale’ pages these days, not to mention the likes of Ebay and Gumtree. You can purchase used or unused second-hand clothes, toys, cars, prams, etc. for a fraction of the price in the shops. One colleague reckons she saves at least £200 a year by doing this.
  4. Have friends round for a drink rather than going out. Forget your organic grocery deliveries – how about signing up to a gin box?! One colleague has signed up to get Gin Explorer – a box of four different types of gin delivered each month! Never has the postman been so popular. For £24.99, you could get eight shots of gin with mixers. More than enough for a few drinks and a natter of an evening, and much cheaper than the pub and a taxi!
  5. Ditch the car. Whether you just use a car less or get rid of it completely, you can save some money here. In London especially you can get an annual Boris Bike card for just £90 and save yourself hundreds in insurance, maintenance, fuel and parking fees. Walking or cycling to work is also good exercise so you could ditch the gym subscription a the same time.

Obviously these won’t work for all of us but I’m sure you can think of plenty other ways to spend less and perhaps save more this year. At least give it a try. Investing £100 a month, assuming 4% returns, could net you more than £6,500 over five years. If you can save £250 a month, your pot of money could be worth in excess of £16,500, assuming the same 4% annual returns! That’s a lot for just a little effort in getting the most out of your finances.

Funds I like for people just starting out investing include Henderson Cautious Managed, Jupiter Merlin Balanced, Schroder MM Diversity Tactical and Premier Multi-Asset Growth & Income. All are multi-asset funds, so are great one-stop shops for new investors, as the fund manager not only picks the underlying investments, but alters the balance of your fund as the environment dictates.

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Darius’s views are his own and do not constitute financial advice.