It's like anything. If you have money, it's easy to save. If you don't – or don't have a lot – it's much more difficult. We're not talking about ways of spending less money; we're talking about actually building up a rainy day fund, or savings, for a specific reason when you don't have very much spare cash. Remember, "mighty oaks from little acorns grow". So start sowing those acorns.
Pay yourself first
You may not have much spare cash and, yes, the rewards for putting money away may not entice you either. However, setting up a direct debit from your account each month – whether it’s from your salary, your housekeeping money if you’re a stay-at-home parent, or even your allowance if you’re a student, gets you into a habit of saving that you’re unlikely ever to abandon.
If you follow the mantra of “paying yourself first”, by setting up a direct debit to your savings account as soon as the money touches your current account, you won’t have to rely on whatever’s left over at the end of the month for your savings. After a while, you don’t really notice the absence of the money that you never had to spend in the first place.
And, while our savings institutions may be much maligned for many reasons, they do at least allow you to set up a savings account even if you can only afford €5 each month.
Permanent TSB and Ulster Bank, for example, both allow you to set up a regular savings account from as little as €1 a month. Over at AIB, you'll need just €10 a month, or €20 at Bank of Ireland and €25 at State Savings sold through An Post.
EBS might not suit you, however – it requires monthly deposits of €100 to open a savings account, as does KBC Bank.
Now you might want to look away when you hear the derisory amounts you’ll earn in interest – just €1.11 a year if you deposit €20 a month with Ulster Bank. Or €1.76 with the best rate available from Bank of Ireland.
However, you might surprise yourself with how much can save. Putting €20 a month away in the first year will give you a little lump sum of €240 at year end, while if you could double your savings to €40 the following year, you would grow it to more than €700.
Turn your spare change into savings
Yes, iTunes or Google Play might be awash with budgeting tools, but tracking your spending only works if you actually track it. And while it might be easy at the start, your enthusiasm can soon wane.
A better approach perhaps is to use a tool that makes you save without you really being aware of it. And here’s where technology can really step up.
Online bank Revolut, for example, now offers a range of services in Ireland, and is fast building up a significant customer base – particularly among millennials and younger age groups. Revolut, which offers a Mastercard as part of its banking service, also has some pretty nifty tools to get you saving.
Once on the platform, Revolut allows you to set up a saving “vault”, for a holiday, or deposit, for example.
To get you saving – without incurring too much pain – Revolut will round-up every transaction you make with your card to the nearest euro and puts it into your vault if you select the “spare change” option. So, if you spend €3.60 on your morning coffee each day, Revolut will automatically put 40 cent into your savings account each morning, while €4.70 on your lunch will see another 30 cent added to your savings.
You can also opt for an “accelerator” button, which will help you ramp up those savings by a multiple. For example, if you select “10x Accelerator”, that 40 cent saved from your morning coffee will see €4 sent to your savings account or “vault”.
Knowing your savings are for a particular reason, such as that new television, holiday, winter coat or Christmas, can give you an extra spur
And you don’t even have to save in euro; Revolut allows you to set up a vault in 25 currencies, including dollars and sterling – a good way to hedge against currency fluctuations if you’re planning a trip Stateside next summer, for example. If you’re a bit more happy to deal with risk, you can even save in three cryptocurrencies – bitcoin, litecoin and ethereum.
Unfortunately, you won’t earn any interest on these savings; as it is an e-money institution rather than a bank, regulations currently prohibit Revolut from doing so.
Of course to really benefit from the tool you need to be making most of your purchases with a card; and you can do this without incurring extra charges, as spending online or in shops with your card is “completely free”, Revolut says.
Setting up a rainy day fund isn’t always the greatest motivation for getting you to direct more of your money to a savings account – one which you may never actually access. But how about if you could easily set up different savings accounts for different reasons?
Psychologically, knowing your savings are for a particular reason, such as that new television, holiday, winter coat or Christmas, can give you an extra spur to up your savings. It might just be the extra push you need to forgo eating out in order to hasten that trip to Spain.
And thanks to the arrival of another new player on the Irish market, this has become a lot easier. Berlin based bank N26 now allows you to create an online current account, through which you can set up separate savings accounts, or "spaces". If you opt for the free account with the bank, you can set up two such "spaces", but if you upgrade your account to the black or metal options, you can have as many as 10 additional spaces active at the one time.
Unfortunately, N26 also doesn’t pay interest on money stored in these spaces, but with rates as low as they are elsewhere, it’s perhaps not as much of a disincentive as it could have otherwise been.
If you prefer to do most of your spending with your card or smartphone, then this is unlikely to help. If, however, you still prefer the feel of cash in your wallet – and the greater control this can give you over your spending – then decide that coins, or, if you can afford it, even €5 or €10 notes are no longer welcome in your wallet.
Each time you get one back in change, it has to go directly into a special jar or tin that you’re using to save for a particular purpose. You simply empty your wallet or purse of the unwanted coins and notes when you get home. With Christmas just around the corner, it could be a handy way of bumping up your allowance for gifts, food etc. And if you’re in a couple, you can double the savings by both doing it.
The downside of course is that the jar can always be tapped when you’re short of cash for the milkman or a school tour that needs to be paid urgently, for example. It might also be wise to keep it hidden if there are children in the house.
Think about savings stamps
It wouldn’t be our favourite for a couple of reasons: the risk that you’ll lose your stamps, or that the shop where you are saving them will go out of business. For some people, however, the tangibility of pasting savings stamps into a booklet is attractive, and can encourage them to save more.
If this is you, then there are number of options you can consider. For children, An Post still offers the Cyril Squirrel savings stamps, which can be purchased for €1 each. They can be a useful reward for children, or a way to encourage delayed gratification with pocket money. Remember, however, that you’ll need an An Post account to be able to access these savings stamps, as they can’t be simply cashed in.
Just because you don't have very much spare cash left over every month, doesn't mean you should completely discount investing
An Post also allows you to spread the cost of a TV licence over a longer period by purchasing €4 savings stamps, but this really only works if you’re a frequent visitor to the post office. And as can be seen by the rake of closures hitting the network across the State, this won’t work for everyone.
Many branches of Dunnes Stores also have little boxes at the back which dispense savings stamps, in amounts of €2 – and you get one free with every card. This can be particularly useful if you have saving for the big shop at Christmas in mind.
Similarly, if you shop at Tesco, you can opt to be a “Christmas Saver”. This allows you to save any vouchers you earn throughout the year. You receive them in time for Christmas. You can also top up these vouchers in store at the checkout and the customer service desk, with sums from 50 cent to €360. If you do, you’ll get a €3 bonus voucher if you top up with €50, or €6 if you top up with €100.
While Lidl doesn’t sell savings stamps, it does have gift vouchers for €10 – so if you spend less than expected on your shop, you could buy one and set it aside for when you really need it.
Don’t ignore investing
Just because you don’t have very much spare cash left over every month, doesn’t mean you should completely discount investing.
Yes, it is riskier than putting money directly into a savings account, but building up skills in investment will stand to you throughout your life, and you could earn a multiple of what you might by keeping your savings on deposit.
Opting for broad index-tracking funds, such as one tracking the FTSE 100 or S&P 500, is a less risky approach than going for individual stocks.
While many of the life assurers operating in Ireland, such as Irish Life, will look for a minimum investment of €100 a month to get access to its range of investment funds, you could consider an international operator such as De Giro.
While the broker requires you to make an initial transfer to verify your identity, this can be as low as one cent. It says that investors with less than €100 a month can use its platform.
According to spokesman Paul Laverty, while you will be subject to an annual fee of €2.50, you can still trade these products once a month and not pay any commission fee, so it would not be uneconomical to invest low amounts each year.