I save £650 a year with an effortless savings challenge – I don’t notice money leave my account & use it for Xmas gifts

MONEY is tight at the moment but that doesn’t mean that you can’t find ways to save for big purchases. 

I’ve found a clever way to save £650 every year, I barely notice the money leaving my account and by the end of it - I’ve got a nice big chunk of money to spend on Christmas shopping.

I first came about the challenge online - when someone revealed you could save £730 a year if you put aside just £2 a day. 

I thought wouldn’t that be handy at the end of the when I’m scrambling to get Christmas shopping done?

Christmas time has always been a struggle since I first entered the working world, even if your employer pays you before the big day you’ll still end up spending half your salary on gifts and then be completely broke in January. 

So why not try and find a way to save up for everything you need before Christmas in a way that won’t hurt your bank balance every month?

I’ve been with Starling Bank for a while and they have a great saving system on the app where you can set up “spaces”.

The “spaces” are in a completely different part of the app - any money you have saved won’t show up in your regular account balance. 

You can give each space a title and even add a cover photo so it’s easy to recognise.

Every time I open the app I’m greeted by cheery red baubles on a Christmas tree. 

The best part about the spaces is they do all the leg work for you, you can set up automatic transfers which can move a set amount of money from your account into your space every day, week, or month.

You can also set yourself a target.

The transfers usually happen between midnight and 2am when you are asleep and your new account balance will automatically update.

The spaces have a handy little feature where you can top up all payments to the nearest pound and have that automatically transferred into a space as well. 

However, it's important to note that your space savings generally won't generate interest.

Starling does have a fixed saver space, where money saved for a year will earn 4.48% interest but you need to deposit a minimum of £2,000 and you can't take any money out during that year.

I’ve done the savings challenge successfully for the past six years and it has made my life so much easier. 

You don’t notice the money leaving your account because it’s just £2 a day.

If you have a particularly tough month and you miss a few days it’s not the end of the world either as it won't drastically affect your final savings pot. 

I find it a lot easier to manage than having a lump sum of £60 a month or even £14 a week leaving my account every month.

You are far less tempted to skip a transfer and if you hardly ever open the spaces section on the app like I do you won’t even see the money until you're ready to use it.

The Starling spaces feature is handy for anyone looking to save, I’ve used them for holidays, investing and even building an emergency fund.

Monzo Bank also has a similar feature called Money Pots.

You can use Pots for anything you'd like – from holidays to groceries.

You can even set up direct debits from your Pots so you can assess your outgoing.

What savings challenges are out there?

There are many savings challenges people can try, whether you only want to put in £1 each week or if you've got a bit more to play with.

Here are some we've seen:

1p savings challenge - £668

You start by saving 1p, then increase the amount you save by 1p each day.

So as day one is 1p, day two means you stash away 2p, and the next day it's 3p and so on.

By day number 365, you'd be adding £3.65 to the account.

If you started on January 1, 2024, and kept it up, you'll have saved a grand total of £667.95 by December 31, 2024.

52-week challenge - £1,378

The 52-week challenge works by getting participants to put aside £1 for the first week, £2 for the second, £3 for the third and so forth, until the end of the year.

The amounts start small, but towards the end of the year, you might find the weekly savings target grows too big.

For example, you'll have to put away the largest sums around Christmas with £202 in total required in the final four weeks of the year.

So before you start, consider whether it could be too much of a stretch at an already expensive time of year.

If you can stick to it though, the payoff is huge as you'll pocket a whopping £1,378.

You could always flip it and start off with the biggest amount (£202 a week) and then get smaller - it might be worth making a chart so you can keep on top of figures.

365-day challenge - £1,456

If the 52-week challenge seems a little daunting, you might prefer the 365-day challenge.

You'll set aside £1 on Sunday, £2 on Monday, £3 on Tuesday and so on, all the way up to saving £7 on Saturday - the largest daily amount of the week. 

You then restart the process on the next Sunday.

This should give you a weekly total of £28 in savings - adding up to £1,456 over the cost of the year.

Round-up challenge

The round-up challenge means you round up money you've spent and put that extra cash away into savings.

For example, if you've bought something that cost £19.30, then you'll round up to £20 and put 70p in savings.

It might not sound like much but if you're doing this with every transaction then it adds up.

Some banks will allow you to do this via your online banking app, so check with whoever you bank with.

If not, then you can also do this with apps like Emma and Plum.  

Money mistake jar

With a money mistake jar, you can make things more personal.

The idea is that you challenge yourself not to do something, or to not make a "mistake".

For example, maybe you want to challenge yourself to go running three times a week, or maybe you want to stop buying takeaways.

These can be your "mistakes" and if they're not fulfilled then you can put money into the jar.

How much is completely up to you.

If you don't use cash often, then you could put money in a "space" with banks like Starling.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.