How to save money: Savers can amass over £600 in a year starting from just one pence

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Sticking to the commitment to set aside a portion of income each month can be difficult to maintain. That is why challenges can be helpful to make sure one keeps on top of their savings.

It would be £3.66 on the final day of a leap year, and due to the extra day, a slightly higher savings total could be reached.

As long as the person makes sure to hit their daily savings target, they would have saved £667.95 after a standard year.

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The challenge can also be done in reverse.

This means the saver would put £3.65 (or £3.66) in the pot and work backwards, reducing the amount each day so that one penny is deposited on the final day.

An analysis of Office for National Statistics (ONS) data by Atom Bank found British households could save £1,899 per year by halving “non-essential” expenditure.

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The bank also conducted a survey on the topic of saving and its psychological impact, finding 75 percent of Britons believe saving £1,000 would make them happier than spending £1,000.

Psychologist at Durham University, Mario Weick, commented: “The evidence suggests that neither extreme spending nor extreme frugality are pathways to happiness.”

“Uncontrolled spending can cause guilt and debt.”

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“On the other hand, being overly frugal can be burdensome and can cause excessive worries about spending money.”

“A healthy balance between restraint and allowing oneself some pleasure and spontaneity is probably an optimal strategy to boost happiness.”

“Saving some income, while giving oneself a spending allowance really does appear to be the golden formula.”

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The one penny challenge is an option for savers as a way of boosting savings without sacrificing their social lives.

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