Seven savings sins: how to stop sabotaging yourself with these harmful habits
In the financial realm, there’s a whole set of sins to avoid if we’re going to be angels with our income and savings.
By Shilpa Ganatra
These sins are a little different to those we've heard about from religious teachings – or from the Brad Pitt movie. But they can still be just as harmful to your pockets.
While the devil might be on our shoulder whispering that we can worry about saving later, it’s only ourselves we’re damaging if we pay heed. Instead, we have the option of going down a more virtuous path of doing the right thing with our money. And if we do, the better news is that we can reap the rewards of our fortitude in years to come.
To take your bank balance from bad to good, here are seven savings sins to be wary of.
As there’s rarely an urgency to the way that we save, it might feel easier just to take action only when we absolutely have to. Our survey on saving habits 1 found that approximately three in 20 people move their savings around to get better interest rates, which means 17 in 20 of us aren’t so fussed about it.
In fact, 16% of respondents admitted to having had the same savings account for more than a decade. Given all the effort needed to make the income in the first place, it’s arguably a sin to leave it neglected in a low interest account.
If researching and opening a new savings account seems like a chore, you could consider an online savings marketplace like Aviva Save. After entering your details just once, you can scan the interest rates from a range of accounts curated by Aviva, then shift your money at the touch of a button. It’s as easy as that. As a quick way to give your savings the attention they need, this sin is easy to absolve yourself of.
2. Slothful saving
Who can be bothered to do anything more than the minimum needed to save, right? The answer, it turns out, is not many of us. The survey uncovered that 15 per cent of respondents keep their savings in their current account, and a further 13 per cent only have one savings account.
To get the most return, it’s time to sit up and strategise. Keep an account you can access immediately, an account that needs a little notice to access, and a fixed-term account for your long-term savings, which often offers better interest rates. Your inner sloth might not like it, but your bank balance will.
3. Misplaced loyalty
Loyalty might be a highly valued moral virtue, but when it comes to your savings, it pays to be fickle. Sure, the bank you’ve been with since your student days might be familiar and trustworthy, but that doesn’t always mean they’ve got the best interest rates around – which is the one thing you need from your bank.
More than one in 10 people only save with high street banks, but it’s well worth taking a look at the lesser-known names on the market to see how their offerings compare, especially as these ‘disruptors’ tend to offer better rates to attract new business. And now traditional banks are fighting back and now offer some tempting interest rates too.
The catch is you won’t be moved on them automatically, and you’ll need to find out about them first. Remember, a small increase in interest rate makes a lot of difference. For example, if you had savings of £20,000, interest at 0.1% (the current Bank of England base rate 2 at the time of writing) would earn you £20 in a year. But if you spot a one-year fixed rate, which is around 1% at the moment, you could see a return of £200 in one year. Worth defecting for, right?
Being disorganised in everyday life isn’t so bad because forgetting grocery items or keeping a messy bedroom only matters so much (except for when the neighbours come around). For your finances, it can have larger consequences, so it pays to keep everything in order.
An easy way to do this is to have dedicated savings accounts for things like emergencies, holidays and home improvement – that way you’ll be working towards clear goals. Just over one in 10 people use this strategy – and will reap the rewards for it.
5. Sporadic saving
It’s a bad habit to only save money that you have leftover at the end of the month – and that mindset contributes to the finding that one in five of us don’t save at all. And lo, the phrase ‘pay yourself first’ was born.
This means that when you get your salary, before you spend it on anything else, slice off a portion and put it away as savings – that way, you’re saving for your future. It’s a tactic preferred by 17% of people. They find their lifestyle adjusts naturally, so without too much pain, they’re able to accumulate some savings for when they need it.
It’s an easy sin to succumb to, especially as life is there to be enjoyed, but one too many splurges can throw your savings off balance. An easy way to keep tabs is either by paying yourself first (see above), even if it’s just a small amount.
If that’s not possible, at least check to see how your savings are doing, which is what one in four people do. A quick glance every now and then will show you if you’re on track, or whether you might need to forgo a delivery dinner or two.
7. Ignoring debt
If the worst comes to worst and you fall into debt, the main thing is not to ignore it, as that can make matters worse. These days, everyone’s understanding about the situation and there’s lots of support, help and flexibility to help people get back on their feet. Read our guide to clearing a debt, and remember that it’s only a temporary blip.
Take your savings from sad to savvy
Aviva Save is a marketplace which gives you access to a selection of cash savings accounts from UK banks.
- One registration, unlimited access
Once you’ve signed up, you can open as many accounts as you like. It’s free to sign up, there’s no obligation to open any accounts, and you’ll never have any fees to pay.
- Accounts we believe in
We’ve chosen every savings account carefully, from a range of UK banks with FSCS protection of up to £85,000 per banking group, so you can mix and match with confidence.
- Competitive interest rates
We’re always looking to add to the range we offer, which we hope will give you savings accounts that match your plans for your money.