'I'm a money expert - here's the best strategy to boost your savings pot every month'

A money expert has shared one of their best strategies for building up a savings pot every month as thousands say they struggle to budget.

A new survey by Money.co.uk found that a quarter of consumers are saving less than five percent of their monthly income.

On average, the vast majority are saving around 12 percent of their paycheck, which equates to approximately £234 each month.

However, most consumers are likely to save between £50 and £100 monthly, with those living in London saving the most at around £300 per month.

Although it’s positive that people are still prioritising saving each month, Lucinda O’Brien, money.co.uk savings accounts expert warns that these figures mean it will take longer to build a substantial savings pot.

Over half of the people surveyed have long-term financial goals, but are finding a lack of disposable income and unexpected expenses are holding them back.

Unfortunately, these results fall short of the popular 50/30/20 budgeting rule.

This rule guides people to save 20 percent of their income, spend 30 percent on wants, and allocate 50 percent for needs.

The ‘needs’ feature includes essential monthly expenses such as mortgage or rent, groceries, bills, and travel costs. Whereas ‘wants’ cover holidays, non-essential items and going to restaurants or gigs.

This technique is supposed to help people keep track of their money by simplifying spending into three categories. It’s also popular as it works well for a variety of incomes and is fairly simple for anyone who hasn’t budgeted before.

But, with some people struggling to save five percent each month, the 20 percent might feel unrealistic.

Expenses might now exceed 50 percent which puts more pressure on the savings pot and any wants. There is also the burden of debt to address, as many people will still be recovering financially after the pandemic.

Instead, Ms O’Brien suggests people use the 50/30/20 technique as a guide, rather than a rule.

Ms O’Brien said: “Try tracking your spending for a month and look for opportunities where you could save money. Then be realistic with how you split your expenses into the three categories.

“For example, if you’re currently saving five percent of your income each month, set yourself a target of 10 percent and work out whether this will be possible by reducing some expenses.

“This could be cancelling a subscription or swapping a night out for a night in. Remember, circumstances can change and you’re in control of your budget, so don’t forget to revisit and adjust the categories to suit your needs.”

While the 50/30/20 rule might feel out of reach today, Ms O’Brien said: “By adapting the rule to suit your personal situation you could increase monthly savings. Then, once you’ve started to build a savings pot, compare savings accounts to find competitive interest rates.

“Top rates on savings accounts are more than five percent, so money can be moved into a high-interest account. You’ll then start earning some interest on top of the money you’ve saved, which will help you to feel more financially confident and secure.”