Make your money work for you this UK Savings Week

UK Savings Week, led by the Building Societies Association, is a chance to take a closer look at your money. It’s not just about checking your bank balance, it’s about understanding your spending, spotting hidden pitfalls, and making smart choices that help turn your earnings into long-term financial security.

This week, financial mutuals across the country, including us, are highlighting one of the biggest obstacles to saving: lifestyle inflation.

The hidden trap: Lifestyle Inflation

Lifestyle inflation occurs when spending rises in step with income. A pay rise or promotion may feel like extra money in your pocket, but its impact quickly disappears if your expenses grow at the same.
It often appears through small increases in spending on:

• Upgrading your car or phone just because you can
• Adding subscriptions that you rarely use
• Spending more on meals out or everyday luxuries

Even a small pay rise, which may be meant to cover higher living costs, can disappear if your spending increases at the same rate. Over time, this means that pay rises do not actually help you save more or improve your financial security.

The 2025 Police pay increase

This year, the police received a 4.2% pay rise, and while extra income is always welcomed, it also presents a choice. Will the money go towards lifestyle upgrades, or will it be used to build long-term financial security? Even putting aside a small part of the increase can make a big difference over time.

You might wonder, ‘Why shouldn’t I just enjoy my hard-earned money?’ The truth is that saving is important for everyone in the UK. Many people don’t have enough money set aside for emergencies or future plans.

Consider these figures:

• One in ten people have no savings at all
• 21% have less than £1,000 set aside for emergencies
• Nine million people have nothing saved, and fourteen million have less than £100 for emergencies
• Around £300 billion sits in accounts that earn little or no interest, meaning this money isn’t working to grow for you.

These numbers show how easy it is to fall behind financially, even with a steady income. Without careful choices, lifestyle inflation can quietly undo progress.

How to make extra income work for you

Here are three simple steps to make your money work harder:

1. Automate your savings: Set aside part of every pay rise automatically. Paying yourself first builds a safety net effortlessly, no thinking required.
2. Give your money a purpose: Money without a goal often disappears. Decide what you’re saving for, whether it’s an emergency fund, an investment, or a holiday. A clear goal makes saving easier and more motivating.
3. Track hidden spending: Small subscriptions, bills, and daily purchases can quietly drain your money. Review them regularly, you may be surprised how much you can redirect into savings.

These steps are not about restricting yourself. They are about making your money work for you so pay rises and extra income improve your long-term financial future.

Turn awareness into action

UK Savings Week is a good time to pause and think about your finances. When your income rises, it can be tempting to increase your spending, but this lifestyle inflation can quietly reduce the benefit of any pay rise. By setting aside part of your increased income, giving your money a clear purpose, and checking your spending regularly, you can make pay rises work for you. Small, consistent actions help build stronger financial security over time.