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How I saved an extra £154 a month using the Active Saving Method

Written by Frankie Entwistle, Digital Content Lead

The Active Saving Method helped me save more money faster than I ever have. I’ve finally got over my lack of motivation and am well on my way to building a house deposit. Here’s how I did it.

I’m terrible at saving money. Ask anyone in my life: it’s a constant battle.

I’m always being told: “just spend less!” “stop buying coffee!” “bring your own lunch to the office!”. And yes, fine, by doing those things I would spend less and, in theory, have more money to save.

My problem is that while I can be strict about not spending for a few days, by the end of the month I still don’t have any spare money to go into my savings account.

I just can’t keep that motivation up, especially if I’ve made a few sacrifices already this month. I feel the urge to treat myself simply because I didn’t buy a coffee on my way to work.

If money is in my current account, it doesn’t stay there.

How to save using the Active Saving Method: case study

So, last month, I tried something new.

The Active Saving Method is a form of micro-saving. It involves putting small amounts of money aside at the time when you would have spent it so that you get the reward of building your savings whenever you make the choice to not spend or to spend less.

So I followed all the advice to spend less, but added an extra step: every time I spent less than I would have I put the difference straight into a separate pot.

Whether that was 1p, £1 or £100 – if I didn’t spend it, I actively saved it.

I found the trick was to save it at the time I would have spent it. That way my current account looked the same as it would have if I’d bought the thing (but my savings account grew). I'm not sure on the psychology behind that but I definitely felt better about my choice when I could immediately see the advantage of spending less.

I was amazed at how it added up. Here’s the steps I followed and the pitfalls I overcame.

Step 1: Work out where money can be saved

I had to be really honest with myself here. I opened my banking app and went through every single spend from the last couple of months, listing everything as essential or not essential.

I could see straightaway where I could reduce my spending, as painful as that felt.

I can make it to work without buying a coffee for example, and I was already pretty sure that all my trips to Sainsburys were costing more than they should be.

Step 2: Create a savings pot

I set up a separate pot in my banking app so that I could move money quickly. If you don’t have this option, you could simply move money into your savings account every time.

Step 3: Save what you don’t spend

Every time I resisted going to the vending machine for a snack I didn’t need or brought my lunch with me to work, I put the money I would have spent straight in my Active Savings Method pot.

Step 4: Do the maths (or don’t)

Every time I thought about buying a coffee and decided not to, I had a pretty good idea of how much I was not spending.

But when I chose cheaper options, it got a bit more complicated.

Take the day I chose a supermarket brand muesli instead of Alpen. I knew it cost less but I wasn’t going to do the maths in the aisle, and it didn’t occur to me to print the receipt at the self-service check out (that would have been sensible).

I thought about looking the price up later but as soon as the thought crossed my mind, I could feel my motivation starting to disappear.

So instead, I simply made an educated guess.

I think I saved about £1.50, so that’s what I put in my Active Saving Method pot as soon as the supermarket bags were unpacked.

In fact, I found that estimating my savings was always more effective. It took the brainwork out of the process and meant I could get on with the fun bit – seeing my savings grow.

The easier I made it, the more likely I was to keep going.

Step 5: Move the money

I thought I’d be tempted to move money back into my current account, but the joy of seeing the savings number go up was as rewarding as a shopping spree.

But I still don’t trust myself. So, as soon as the month was up, I moved that £154 into my Lifetime ISA safely away from temptation.

Where I saved money

Buying soft drinks

I’m not one to stay home but I can happily enjoy myself without alcohol. So, I still went out, but I (mostly) drank only soft drinks. I was shocked by how much I saved!

Of course, this had an added health bonus.

Saved: £54

Not buying coffee

I’m ashamed to say that I didn’t quite break this habit but instead of buying three or four cups a week, I made it a Friday morning treat. Which took me from mindlessly spending around £12.40 a week to £3.10.

Saved: £31

Cancelling a subscription

I don’t know when I signed up to Amazon Prime, but I just don’t use it. So that’s £8.99 straight in the savings pot.

In the spirit of the challenge, I cancelled this subscription right at the start but waited until bill day when I would have paid it before moving the money into my savings pot.

Saved: £8.99

Buying non-branded food

I went to the supermarket and bought cheap muesli. I’m a new type of serial (cereal) spender now!

Saved: £24

Bringing lunch into work

Again, I did a bit of guess work here. I estimated that I spend about £6 a day on buying lunch, whereas bringing my own probably costs about £1.50. I don’t go into the office every day so only made this saving when I did but moving the money and growing my savings made my lunch break a little bit more interesting!

Saved: £36

Buying soft drinks £54
Not buying coffee £31
Cancelling subscription £8.99
Buying non-branded food £24
Bringing lunch into work £36

Next month, I’m planning on getting better at buying in bulk, giving Costco a try, looking out for offers in supermarkets and doing a charity shop spree to find an outfit for a wedding this summer.

Frankie is a Content Designer at OneFamily.

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