5 ways to boost your savings forever

Last week, I went through my annual ritual of checking I was on the best deal for electricity and gas. I was shocked to discover that I could immediately save around £120 per year by switching suppliers, so I did.

Imagine that, I almost ended up spending £120 for absolutely nothing, because the gas and electricity flowing into my home would be the same regardless of which company I paid for it. The energy company I was with had suddenly hiked the price, which is a habit many of them have adopted, so it pays to keep an eye on them. I used one of the comparison websites that are free to use, and the whole process took about 15 minutes of my time, which works out at a fine rate of pay, considering the saving I made – money which I can now use to boost my savings.

Trim your outgoings

You can boost your savings by trimming all your outgoings, such as telephone, internet, TV contracts, and insurance. It doesn’t take long each year to search for the best deals and to switch, and you could save hundreds. If you get into the habit of shopping wisely for groceries, clothing and other essentials, you could save hundreds more.

Save something every month

By developing a regular savings habit, you can really start to build up your savings pot. But where should you put it? Some of the best rates of interest around are available with current accounts such as the TSB Classic Plus account, which pays you interest at 5% annual equivalent rate (AER) on balances up to £1,500. Then there’s the Nationwide Flex Direct account, which pays 5% AER on balances up to £2,500 for the first year, before dropping to 1% (at which point you could switch accounts again to something better).

My Foolish colleague Edward Sheldon recently punched out an article setting out the pros and cons of other types of higher interest savings accounts and fixed-term savings accounts, which are available too.

Invest in a Lifetime ISA (LISA)

If you fit the age limitations the Lifetime ISA (LISA), it strikes me as a bit of a no-brainer because the state will add a 25% bonus on top of what you put in. So, if you save £1,000 per year, you’ll have £1,250. And if you save the full £4,000 per year that you are allowed to save under the scheme, you’ll have £5,000 – plus all the interest, capital gains and share dividends you accumulate over time.

The LISA is a tax-free wrapper that allows you to save cash to earn interest, or to invest in shares on the stock market. But the money must be used to buy your first home, or to use when you retire. The great thing is, if you save your full allowance into a LISA every year, you’ll still have a £16,000 allowance in an ordinary ISA each year to use up on top.

Invest in an index tracker fund

Finally, I reckon one of the best investments you can make is to drip regular money into a tracker fund that follows the FTSE 100 index, or perhaps the FTSE All Share index. The great thing is you can do that within your LISA or ISA tax wrapper.

Want To Boost Your Savings?

Do you want to retire early and give up the rat race to enjoy the rest of your life? Of course you do, and to help you accomplish this goal, the Motley Fool has put together this free report titled "The Foolish Guide To Financial Independence", which is packed full of wealth-creating tips as well as ideas for your money.

The report is entirely free and available for download today, so if you're interested in exiting the rat race and achieving financial independence, click here to download the report. What have you got to lose?

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Read Full Story