Forget revenge saving... use our mind-trick saving method to build a healthy pot of cash instead

The trend of 'revenge saving' has gained popularity on social media as a way to budget and take control of finances.

It sees Britons diligently save rather than spend and carefully track their pots as with normal budgeting activities.

But it goes a step further by deliberately not spending and taking part in savings challenges to build up a cash pot.

While some people may view it as yet another buzz-term for saving and budgeting, anything that gets people in the habit is a good thing.

Often taking the first step is the hardest when it comes to our finances.

Below, we reveal five 'mind-trick' savings habits, as coined by This is Money, to get you to build up a pot of savings without even realising you are doing it.

Many fall down at the first hurdle when it comes to saving by believing they don't have enough money to save in the first place.

This defeatist thinking prevents people from starting a saving habit at all, so shift your mindset.

What you may forget is that saving just £10 a week to put away for a rainy day is better than nothing.

Rachel Springall, finance expert at rates scrutineer Moneyfacts Compare says: 'It is a misconception that saving a little bit here and there is not worth it.

'This is untrue, all the pennies add up and they work harder in accounts that pay decent returns of interest.'

Almost a third of people, some 29 per cent, say they regret not starting to save sooner, according to research from Tesco Bank.

Some banks will allow customers to round-up their spending, such as Lloyds Bank, with its save the change scheme, so people will be saving cash without realising it, every single time they spend. This can go towards a meal, holiday or more over time.

If you do tuck away £10 a week at the start of the year, it'll turn into £520.

Savings rates have slipped down since they reached their most recent peak in October 2023.

At that time the best easy-access account paid 5.2 per cent and the top one-year fixed-rate bond was offering 6.2 per cent.

Fast forward two years - now the base rate is at 4 per cent and the best version of these available to savers are a 4.3 per cent easy-access account and a 4.45 per cent fixed-rate bond.

Andrew Hagger, of founder of personal finance website MoneyComms, says: 'Even though rates are less attractive now that shouldn't deter you from saving.

'Even with no interest you are building a capital sum, the interest is just the icing on the cake albeit a bit thinner than it was a year ago.'

Even if you put away £100 in the average one-year fixed-rate account which has a rate of 3.98 per cent according to Moneyfacts Compare, you would earn £4.05 on top of the £100 you put away at the end of the 12 months.

But the crucial thing when starting out is to snap out of the mindset of not earning much interest.

It is likely to be a pittance if you're tucking away a little every week or month from a standing start - the crucial part is to get into the habit.

Regular saver accounts are a great place to start with smaller sums. These offer as much as 7 per cent.

After a year of tucking away a small amount, you would have snowballed it into something more substantial.

For example, a £10 a week savings springboard might not seem like much but it will snowball into £520 over 52 weeks.

It will also have the benefit of compounding if you keep it in a savings account earning interest.

What you do next with the £520 is keep it rolling downhill and in your mind it becomes an even bigger snowball.

Read More

Albert Einstein called compounding the eighth wonder of the world.

It is the addition, repeatedly, of interest to the principal of a deposit or a loan.

It describes what happens when you earn interest on both the money you have initially put aside plus the interest you have already earned on that starting amount.

Say as an example you saved £100 in a bank account and you earn 10 per cent interest on that money, after one year your account will hold £110 made up of £10 of interest plus £100 principal.

If you leave the accumulated capital in the account and it again earns 10 per cent interest, by the end of the second year you will have £121 made up of £11 of interest plus £110 of starting capital.

By the end of the third year you will have £133.10 made up of £12.10 of interest plus £121 of starting capital. The bigger the sum, the more the impact.

Starting small and increasing the amount you save by just a little at a time can help you build up a pot very quickly without realising with little effort.

You could start with 10p on the first day then up it to 20p, 40p, 80p, £1.60, £3.20, £6.40, so after one week you have £12.70.

Mr Hagger says: 'If you can repeat that every week for a year you'd have £660.'

There are apps you can use to do this for you so you don't have to do it manually which link to your bank account, for example if you have a Monzo Extra, Perks or max account which cost between £3 and £17 a month.

This is perhaps the ultimate way to save money without having to think about it and to totally put it out of your mind.

You can set up a direct debit at the same time each week or month to come out of your current account into a savings account, as many people do with their utility bills or rent or mortgage payments.

There are also handy savings apps which can do this for you such as Plum.

This could be on payday when your salary is paid into your account. This way money will come out of your main account without you even realising.

Ms Springall says: 'You could use apps like Plum to automatically save cash every single week. If it collected £20 a week from now, that is £260 saved by Christmas week.

'It only saves what you can afford as it links to a current account and checks balances.'

Not all This is Money readers are lucky enough to have big savings pots - but if you have managed to build up a substantial sum from a standing start, share your wisdom in the comments section below - or email: [email protected]