Regular saving: why small amounts can add up

Saving little and often is a perfect way to start a beneficial long-term savings habit. Rather than pressuring you to find space in your budget every month, it allows you to begin building up your savings pot at a comfortable, consistently achievable level that can grow into a substantial amount over time.

Why saving little and often can go a long way

While it may not feel like much to begin with, consistently putting away small amounts can grow significantly over time to strengthen your financial security. Think of it like building a tower, where what initially feels like the insignificant foundation of a single brick is eventually developed into a large structure. In the same way, your small savings can add up over time into a significant pool of funds. Starting with just £5 or £10 a week, across years of consistent saving, can eventually go a long way.

What could my small savings build up to?

The easiest way to understand this is with an example: if you saved just £10 a week for 3 years, you’d have built up £1,590 before interest. If you added 4% interest to those savings as an example, compounded over that 3-year period, you could end up with £1,653. Saving for 5 years, that amount would climb to £2,600 before interest.

Naturally, the more money you can put away week after week, the higher that projected future total becomes: £50 a week for 3 years would achieve £7,950 before interest. From these figures, you can clearly see how the small seed can grow into a significant savings pot, provided you stay committed to regular saving. The sooner you start and the longer you save, the more benefit you’ll also gain from compound interest.

How would compound interest enhance my savings?

Compound interest means you not only earn interest on the funds you originally saved, but also on the interest already earned on that money. In this way, compound interest can create a snowball effect for your savings: the longer you keep your money saved, the more interest accrues and simultaneously the more compound interest is earned on both your original funds and their interest. So, the longer you keep your money saved the more compound interest can build up. As a result, it becomes important to build a regular savings habit to maximise your potential earnings from interest.

How to simplify building a consistent saving habit

Saving little and often is a simple and easy way to safely build your financial security without putting too much pressure on your monthly budget. The key, therefore, is to decide how much money you can consistently afford to save and try to create a habit of doing so. For many people, building this routine is as easy as setting up a standing order which goes out after their payday. Everybody’s finances fluctuate, so it’s okay to be flexible should you wish to either increase or decrease this monthly savings amount subject to what you can afford at the time. Sometimes you may only be able to afford saving £5 a week and sometimes it could be £20 or more. All that matters is that once you’ve started, you don’t stop. With the benefit of compound interest, even a relatively small amount can eventually go a long way if you stay consistent.

Is the interest rate the most important part of a savings account?

While attractive interest rates can help develop your savings, they shouldn’t be the sole deciding factor. Ask yourself how frequently you might need to access your funds, and if an account allows that activity. How is the interest paid, and is the minimum balance within your budget?

What kind of account would suit my savings habit?

This depends entirely on what you’re saving for, and how often you may need to access the money. Kent Reliance Easy Access accounts are a flexible option as they allow you to withdraw funds without having to give notice and can be opened from as little as £1. Rates are always variable, so making the most of your money means paying attention to current product information and weighing your needs against which account can offer you the most suitable place to keep your savings.

Final summary

With all this information to hand, ask yourself these questions:

• What is the purpose of my savings? Am I building up emergency funds, focusing on a specific planned purchase or another reason?
• After looking at my average monthly expenses, how much money can I comfortably save every week/month?
• Would I be comfortable starting a standing order to automatically save those small amounts after payday each month?
• Depending on how I use my money, would I need to create an account that will allow me to quickly access these funds?
• After a period of adjustment, could I begin to increase the small amounts I save?
• As an exercise to prove the value of this potential habit, could I calculate how much my small monthly savings would build up to over the course of a few years?

Frequently asked questions

Is saving small amounts worth it?

Absolutely. In fact, saving little and often is an excellent way to ensure you can start building a regular savings habit without putting too much pressure on your monthly budget. It’s easier to consistently save a manageable amount every week, than to have to calculate what amounts you can afford to save at the end of each month.

Is it worth saving just £10 a week?

If you consistently save just £10 a week for a year, it will add up to £520. Over 3 years, that’s £1,560. All this is before interest, which increases these figures exponentially the longer they stay saved. The sooner you start saving, the more worthwhile that £10 a week becomes.

How can I simplify the process of saving regularly?

Setting up a standing order to take a regular payment automates this process and allows you to focus on budgeting. Begin with a small saving you can comfortably pay each month and increment it as your income, expenses or ultimate savings goals shift over time.

How does compound interest work?

Compound interest simply means that the interest you’ve earned on your savings will also begin to earn additional interest of its own. The longer you keep your money saved in that account, the more it'll snowball and build higher levels of interest. Naturally, this will be subject to your account rate and terms.

Next steps

If you want to start saving regularly or review where your money is held, these Kent Reliance pages may help:

Compare all savings accounts

Explore Easy Access Savings

View Cash ISAs

View Fixed Rate Bonds

View current interest rates

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