Tips for saving

Whether you’re new to saving or you’ve saved for some time, all of us could do with a few hints and tips that could save us money for later.

Budget better

If you want to save more, but you don’t know how, you need to learn the art of budgeting. It means planning what you’re going to spend and sticking to it.

Check your outgoings

To start with, look at what you need to spend.

‘Nice to haves’ vs ‘must haves’

It can help if you can divide your outgoings between what you must have and the extras that you could do without. You don’t have to do without the ‘nice to haves’ altogether. But maybe a few less can make them more of a treat. Some of the things that look like ‘nice to haves’, like holidays, are probably ‘must haves’ if you want to keep your mind and body together.

Know your budget, then plan to save

Once you have a good idea of what your monthly budget looks like you can consider:

  • how much you can afford to save
  • how much other people are saving for you. Like your employer if they pay into your workplace pension
  • how much you’ll need to support you in retirement
  • how long you’ll be saving for.

Debt vs Saving

Which is better, paying off debt or saving? To figure this out add up the cost of your debt against any growth you might get from any saving.

Let’s have a look at some examples.


Short-term debt versus short-term savings

A credit card debt of £1,000 charges 20% interest a year, which will cost £200. £1,000 in a savings account, with a rate of interest at 1.5% would earn £15 of interest in that year. So saving, rather than paying the debt, costs you £185 more.

In the short-term, it could be better to pay off debt if the interest rate is high.


Long-term debt versus long-term savings

Another way of tackling the same credit card debt could be to get a loan that charges you a lower rate of interest. If a loan has 10% interest, you’re £100 a year better off, which you could save.

Life changes

You might have everything planned out. Then life will throw you a curve ball. You may move house, change jobs, get married, have kids, get divorced, take a career break, get made redundant or set up your own business. Any of these events could affect your savings. Whatever happens, it’s important to review your saving plans to make sure they’re still right for you.

How having children can affect your retirement planning

Our report, Scottish Widows Women and Retirement 2019 (pdf) shows there’s a widening gap between how much men and women save for retirement. Women spend more time and money, than men, looking after children. So they save less.

Retirement may not be the first thing new parents think about. But it’s worth thinking about how children can affect how much you save.

Maternity leave While you can take this for 52 weeks, maternity pay is only paid out for a maximum of 39 weeks. During the paid leave, your employer will pay into your pension, based on your normal salary. But what you pay into your pension will be based on the actual pay you receive. So you might be paying in less.
Staying off work to look after your child Payments to your workplace pension will end, but you can keep paying into a personal pension.
Coming back to work part-time You and your employer normally pay a percentage of your salary into a pension. If you reduce your pay by cutting back your hours, this will reduce how much you save.
Childcare costs Research from the Fawcett Society suggests that childcare costs can fall more on one parent than the other. This means there’s less for that parent to save for retirement.

What can you do?

Keep paying into a pension You don’t have to be in work to keep paying into a pension. You still receive tax relief on the first £2,880 you pay in. If you work part time, you can increase the percentage you pay in to reduce the impact of contributions being based on a lower salary.
Discuss how you can share the costs Talk about how you can share the effect of lower pension payments. See how you can cover childcare costs together. One parent can pay into the other’s pension. This still gets tax relief.
Understand how child benefit can impact your State Pension You need 35 years of National Insurance (NI) credits to get the full State Pension. Even if you’re not working, if you have a child under 12, you will get NI credits if you claim Child Benefit. This can make it worth claiming, even if tax takes away what this pays you.

Pensions are a long-term investment. The retirement benefits you receive from your pension plan will depend on a number of factors including the value of your plan when you decide to take your benefits which isn’t guaranteed and can go down as well as up. The value of your plan could fall below the amount(s) paid in.

We recommend that you get advice on your long term pension plans, or if you’re considering making any changes to your pension payments which may affect your financial future.

When to retire


When you retire can come down to when you can afford to. The State Pension age is 68 if you were born after 5th April 1978. So there may be a gap between when you want to stop or reduce your working hours, and when you can claim it.

You can start taking money from your pension from 55. But you need to make sure you have enough money in it to last the rest of your life, if you don’t have any other source of income.

If you can picture when you want to retire, you can plan a comfortable one. Think about how much you will need in your pension and other places, like savings. If you can save enough, you can make it happen.

If you delay when you take the State Pension, or your own pension, you could increase the amount you can take. Find out about deferring the State Pension

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