It might come as a shock but almost 17 millions people of working age across the UK have less than £100 in savings, those just for a rainy day – according to a poll conducted by Money Advice Service in September 2016. We all know the benefits of having a back up fund but how do you go about saving money when you don’t have a lot to put away? Skimming, that’s how.
What Is Skimming?
If you’ve ever worked in a job where money is exchanged between customer and cashier, such as in a shop, then you might have come across the phrase skimming. Basically it’s a process of taking excess cash from your main source, such as a till, and putting it somewhere else. This is often a safe box or similar. Within the work place it has advantages such as ensuring there is less in a till should someone want to rob the place or just making it easier to cash up at the end of the day.
You can use the act of skimming to help you regularly save, without really noticing you’re doing it.
How Does Skimming Work?
The great thing about skimming is that you can pretty much control how and when it happens. Unlike committing to a regular savings amount which automatically comes out of your account, if you really can’t afford it this week then you don’t have to do it.
You decide on the frequency whether it’s daily, weekly or monthly. You then take a look at your bank balance and transfer the odd pound and pence into a separate account. For example:
Your bank balance is £352.76 and you skim daily, you could round that amount to the nearest £1 (bank limits depending) so put the 76p into a separate account. Alternatively, do it weekly and round it down to the nearest £5 or £10 mark which means you’d transfer £2.76 into a separate account.
If you do a similar amount weekly for a year you’d have over £100 saved without really realising it had gone.
Skimming can work however is best for you. Some people will wait until all the bills have been paid then skim for the loose change, then do it again just before payday and save that way. It does mean that if you’re struggling more this month or week you can skip it all together and focus on paying bills, eating etc.
You can work skimming into your life however feels best, just make sure you set regular reminders so you don’t forget.
There are a couple of services that can automatically skim your bank account after analysing your spending habits and income. They work out how much you can afford to save and automatically move it into an account for you. Services such as Plum also offer a higher savings rate than most saving accounts. They also have safeguards in place to ensure you don’t drop in to your overdraft and you can even communicate through Facebook messenger.
What Kind Of Savings Account?
Before you decide to give skimming a go do a little research into accounts to move your skimmed money to. Sometimes regular current accounts can have better interest rates than savings accounts, long term savings accounts tend to have better rates than instant savings accounts too. You’re best trying to decide how you want to manage your spending, such as do you want instant access to the money for emergencies or do you want to save for the longer term?
Just because it’s “savings” doesn’t mean it has to go into a savings account. Personally I prefer a separate account alongside my current account provider as their app allows me to switch money between accounts easily.
Why don’t you take on the skimming savings challenge for a month, see how much you save and how little you notice the money that’s been moved. Let me know how it goes.