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Savings: are you getting your fiver a day?
Feel guilty about not saving but don't know where to start? We show how you can get started with five pounds a day – and a jam jar.
by Gavin Lumsden on Feb 06, 2012 at 09:53
Want to put some money aside for the future but don't know where to start?
Or does it seem impossible when every day you wake up to find another bill on the doormat? If this sounds familiar, don't panic – you're not alone.
As we explain in this video, the key is getting started: small steps, such as putting a fiver a day into a jam jar, can make a real difference in the long term. Just as importantly, they'll get you in the saving mindset and help you feel like you're in the driving seat when it comes to your finances.
Learn more with our beginners' guides to savings:
What is an ISA and how to pick one
What is a pension and how to get one
I’ve come to the City of London, outside the Bank of England to talk about how you can use the humble five pound note to get started as a saver.
You’d be amazed how many people feel guilty about their lack of savings and yet feel unable to do something about it.
So, if you think you are a feckless, spendthrift, here’s a simple tip to help you engage with your money.
Go and buy a jam jar. That’s right. And then each day take a five pound note out of your bank account and put it in the jar in the evening.
Experts say buying the jar will give you a sense of ownership over your cash.
Also you’ll enjoy placing the notes in the jar and watching your money grow.
We all know about the 5-a-day health campaign to get us to eat more fruit and veg.
So what about a fiver-a-day financial health policy to get more of us saving?
I reckon that’s something Bank of England governor Mervyn King would agree with.
But is a fiver a day enough?
As The Lolly guide on this topic tells you, one rule of thumb is you should be saving half your age a year. That’s 15% of your salary if you’re 30, rising to 20% at 40 and 25% if you’re 50!
For example, if you’re age 40, earning £40,000 that’s £8,000 a year or £666 a month or £166 a week.
That’s a hell of a lot I admit. The fact is the longer you delay starting to save, the more you need to set aside as your money has less time to grow.
But such figures are discouraging if you’re struggling with a mortgage, a family and the rising cost of living.
That’s why I go back to the five pound note.
It’s tangible, it’s a start and it’s achievable. It’s not a piddly amount either. It’s £35 a week, £140 a month or 1,680 a year.
If Mervyn and his successors do their job properly with inflation and interest rates then it could be worth around £60,000 at least in 20 years’ time.
Of course, you’re never going to challenge the City slickers with that kind of Lolly.
Once you get the savings habit, you should consider increasing the amount you set aside each month.
Make a fiver a tenner, that sort of thing.
But at least fiver a day gets you started in the right direction.
For more information on how and where to save please go to the guides on The Lolly website.
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More about this:
More from us
- How to pick the best savings account
- What is an ISA and how do I get one?
- What is a pension and how do I get one?
6 comments so far. Why not have your say?
smoking gun
Feb 06, 2012 at 17:37
This is a great idea especially for those with credit card and loan debts and I suppose saving a fiver day to help pay off their loans would be good idea. But aren't they just a slikely to use for new purchases. And then ... there are thousands of people out there who wish they could put a fiver a day away but just don't have it. £35 or eve £25 a week would buy their weekly shopping or in most cases only a portion of it. Those that can save a fiver a day probably could, and possibly do, save much more so isn't this just preaching to the converted. The principle sounds good but seldom works in practice.
report thisAnonymous 1 needed this 'off the record'
Feb 06, 2012 at 17:54
£5 per day in saving? Waste of time as you are just losing money due to inflation. You are better off just buying stuff, and if you can, load up on debt to buy assets (like houses). You can't lose since if you are broke, your rescued and still keep the house. If you do without by saving, savings are used before any help comes your way.
report thisSpartacus
Feb 06, 2012 at 19:51
I save 55% of my income, according to the "half my age" formula, that puts me at 110 years old!
report thisstormdog
Feb 06, 2012 at 19:56
I don't manage £5 every day but it is almost true to say that I have not 'spent' a £2 coin since the day that they were first issued.
Whenever I get these coins, in change, I place them in a late C19th enamelled Russian pot until the pot is so full that the lid has lifted, then I take them to the bank and get £400 in fifties.
Next I go to my favourite money changer and buy some 'trendy' overseas bank notes which I then spend on holiday.
It really does make a difference, particularly so since my wife also participates in this scheme.
We only get about £1,000 a year, there again - every little helps.
report thisFranco
Feb 06, 2012 at 21:34
Good sales talk from the pension industry, the biggest legal robbers ever heard of, who take your first 2 years' contributions for themselves to start with and then as much per year as they want, without ever telling you. Add to that inflation at 4% per year and when you are 65 you will get a pension no more than the government supplement, if you are very lucky.
The good thing is that forfeiting your pension supplement will relieve the government from having to stop bankers' bonuses or closing the tax loop holes available to the top 1% and ex ministers.
report thisyorkshire-grit
Feb 11, 2012 at 11:50
I do the £5 a day and it costs me nothing, 5 pounds a day £1825 a year is money i get for nothing by having a salary sacrifice pension and not having to pay Nat Insurance and by getting back 95% of the national insurance my employer also dosent pay!........I get the tax not the gov.
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