The Claro Savings Index:
How you can spend less and save more

Feel like your financial goals are out of reach? They might actually be more achievable than you think. This is how.

Even with the smartest of spending habits and the most forward of financial thinking, it can be tricky out there. The economy’s in paralysis, new opportunities are few and far between, and if you’re fortunate enough to have a good job then planning your financial future, to put money aside for a house deposit or marriage perhaps, is a challenge. 

There’s an air of uncertainty hanging over everything at the moment. Especially for young people. 

But it’s not as though things were easy for young people even before the economic turmoil of 2020.

The problem? 

Even if you have a well paying job and smart spending habits, it can be tough to make ends meet. The great news is that once you start to make even the most modest saving a regular part of your financial life, you’ll quickly be on the road to achieving your long term goals.

The cost of living in 2020

The average household rent in the UK is now £987
The average household spends £1,274 a year on Council Tax
£2,111 is spent annually on home services and utilities such as gas, electricity, tv licence and internet
£3,219 is spent annually on food and non alcoholic drinks

With average salaries for 20-year-olds around £500 a week, even if you’re house sharing, it’s easy to see how living costs can take huge chunks out of your income. It’s no wonder so many young people find it difficult to save (almost half of 22 to 29-year-olds don’t have any savings at all).

And with sympathy (and more importantly support) thin on the ground from older generations, it’s up to young people to take the initiative here and do what we can do to start helping ourselves.

Why? Because if you want to buy a home of your own one day, with the average 15% first-time buyer deposit now almost £30,000, then saving is essential. 

It’s not just homes. If you’re planning a wedding, the average cost is £16,250. And that’s not including the honeymoon!

And raising a child? That will cost around £80,000 – give or take the odd Cornetto.

Changing financial habits – for the better

If you’re going to change any financial habit, make it this one: the habit of regularly putting money aside. The amount isn’t the most important thing – it’s getting into those good financial habits in the first place that matters.

Whether you save £10 a month, £20, £50 or £500, the sooner you start, the more opportunity your money has to work for you. And the more it will eventually be worth.

And not just for that dream home. For that dim and distant retirement too. 

The challenge for millenials 

Most older people today have had it relatively easy. They’ve had generous government help, and many have retired on final salary schemes. Things are tightening up and with the population aging rapidly, there’ll be much less support to go around. 

We need to look out for ourselves. With the auto-enrolment pension scheme (something you might already be familiar with) a big part of your financial future, it’s definitely worth factoring in extra pension contributions.

But how?

Costs are spiraling and income is under pressure. What can you do to get on the savings ladder? What can you do to give yourself the chance to buy your dream home, host a picture-perfect wedding, travel the world, drive that flashy car you’ve always had your eye on or head off into the sunset on that long, well deserved and well funded retirement?

The important thing is to not panic. This is a long-term problem solving exercise, and like all problem solving, it’s normally best achieved one step at a time.

‘The man who removes a mountain begins by carrying away small stones.’
Old Chinese proverb

And it’s true – your savings success will be achieved over time with small but significant steps.

Here’s the first.

Create a budget

Take a step back, sit down and work out exactly how much money is coming in and what’s 

going out. 

Budgeting is an essential element of your overall financial strategy. It looks at the money you make, the money you spend and helps you put together a plan to keep you on the right side of that equation. More than just making sure your bills get paid on time, your budget will quickly show you how much cash you have available for emergencies and how much you could actually save.

Other important reasons to budget:

Small savings that make a big difference

Let’s break down some of life’s more important (and more expensive) moments and look at how your marginal gains – a succession of small but consistent savings you make – can all add up to make a big difference.

How the Savings Index works

The Savings Index is a way to look at your everyday expenses (that you probably don’t think twice about), and think about how these costs add up over time and whether this money could be put towards your financial goals instead.

For this Index, we’ve used a  house deposit as our example financial goal, as 91% of millennials aspire to own their own home, but two-thirds think that saving for a deposit isn’t possible for them.We’ve taken ten years’ worth of spending on common outgoings (for example, bills and eating out), and calculated it as a proportion of £30,000 (the average house deposit). We’ve called this number the index value – and the higher the number, the more opportunity there is to save.
So, for example:

Mobile phones – We spend an average £547 a year on our mobile phones.This is a ten year total of £5,470, which equates to 18.2% of that £30,000 house deposit. The index value is therefore 18.2.

Now, we’re not suggesting you get rid of your phone – the idea is to draw attention to a range of saving opportunities and hopefully highlight some easy wins, along with areas of spending that might particularly benefit from some close cost saving attention. So, whereas your phone is a necessity, is the contract you’re on really what you need? Or could a cheaper tariff still suit your requirements?

As with the budgeting exercise we looked at earlier, even just listing things you spend money on – especially on a recurring basis – brings them front of mind, makes them real and helps you ask yourself the question, ‘Do I really need to spend money on this?’

The name of the game? Driving that index value down so you have more money to put towards your financial goals!

The higher the index value – the more opportunity you have to save.

Identify the high index numbers
Check your own spending in these areas
Look at ways to bring the number down
Add those savings to your deposit fund

The Saving Index

TV & film streaming sites

Love your movies? Maybe too much? Netflix, Amazon Prime, NowTV, Disney, MUBI, Sky Movies – do you really need more than one?

Nearly 10% of homes now subscribe to at least Netflix, Amazon and NowTV. Are you one of them? Do you need to be? Really? And if you’re chasing a particular show around the net, be sure to unsubscribe an existing platform before signing up elsewhere.

At an average monthly subscription of £7, cancelling just two of them will save you £168 a year.

Index value – 0.6

A Sky subscription alone can cost somewhere close to £600 a year if you take the films and sport.

Index value – 20

Music subscriptions

And what about your music streaming apps? Apple Music, Spotify, Tidal, Youtube, Deezer, Google Play – again the list is huge and you may well be on more than one. And ask yourself, do you even need one?

Lose one a month at £10 and that’s £120 saved every year.

An index value of 0.4 might not look very much but it all adds up

Index value – 0.4

Mobile phones

We spend an average £547 a year on our mobile phones.

Index value – 18.2

24% of people have never changed provider, and one in five don’t even know what their phone plans include. Better deals out there? Almost certainly, especially if your contract includes a handset.

A third of contracts include a bundled handset that’s still being billed for even after, technically, it’s been paid off. It’s estimated that users are potentially overpaying by as much as £400 a year.

This overpayment alone has an Index value of 13.3


We all take out insurance. Life insurance, buildings, contents, and car. We insure our mobiles, our laptops, our travel, pets and the rest. All with an average annual value of £2042.

Index value – 68.1


Two thirds of Which? members confessed to never having switched energy suppliers. And they’re meant to be switched on! With households spending an average £1,491 a year on utilities and estimated savings of  £170 or more up for grabs, you’d be mad not to.

Index value 49.7

Gym memberships and sports equipment

Running shoes gathering dust? Speedos lost in a draw somewhere?

Figures reveal that the average adult wastes £303 a year on unused gym membership and another £158 on unused sports equipment. Don’t be one of them. It’s time to get your finances in shape.

Index value – 15.4

Eating and drinking out

A quick bite to eat here, a quick catch up there, a quick ‘who fancies another one?’ – it all adds up, not to mention the temptation of those Uber Eats and Deliveroo codes that land in your inbox. So, it may come as little surprise that the average household is spending more than £40 a week on drinking and dining – and how many of us order a takeaway when we’ve already got a fridge bursting with food? Take a look, there may be short term social savings you could make in pursuit of your long term goal.

Index value 64

Coffee alone has an Index value of 10.1, so next time you’re tempted to grab a quick flat white, maybe think of those roses around the door.

Looking to save even more money? Then here’s some extra tips:

Buy in bulk
Use comparison websites
Get loyalty and reward cards
Travel off-peak
Pick up own-brand groceries
Invest in some draught excluders
Get on your bike
Take doggie bags when you eat out
Car share, wrap up warm, the list goes on…

The more unnecessary expenses you can pinpoint, the more money you can save and the more you have to put towards those all important financial goals.

What is compound interest?

Once you start saving money – whether it’s by putting it into your savings account, investing in stocks or contributing to your workplace pension, compound interest is a way to maintain and grow the value of the money you have put aside.

Essentially, compound interest means interest on top of any interest you gain on your savings. Over time, this interest will keep adding up – although it may not seem like much at first, it’s a snowball effect, eventually adding up to pretty impressive figures.

Ready to start making a change?

With your money budget planner in place, and a clear understanding of your finances and where your money is being spent, whatever your budget and whichever type of saving appeals most – now you’re ready to make your move.

And if that move means only a small saving here and a small saving there to start with, that’s great. There’s nothing to stop you upping the amount you save over time.

The important thing is that you’re up and running. Congratulations.

How Claro can help

If you need help making smarter financial and investment decisions every day, Claro can be your digital financial coach, giving you access to a supportive community you can discuss your money goals with.

Download the app to join our movement.

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