It’s simple, effective and fun to use – more than 2.5 million have now signed up to Plum’s app to help them manage their cash

Are you looking to build up your savings, but have no idea where to begin?

The sheer number of savings accounts and products on offer can be overwhelming, especially if you’re just starting out.

In fact, several studies have found that many of us are gripped by “savings inertia”, where we stick with our current savings provider even when there are better options available, because we perceive it as too complicated and difficult to switch.

Plus, with the cost of living remaining high, households are increasingly tightening their purse strings and do not want to feel extra pressure to save a set amount each month.

Thankfully, smart money app Plum has removed both of these barriers to saving.

Analysing your spending habits

Plum uses automated processes to help you set money aside without even noticing, while using clear and simple language to make saving accessible for everyone.

More than 2.5 million people have now signed up to the app to help them manage their money.

One of these is stepmum-of-three Alexandra Rees, 44, who started using Plum three years ago to build up a rainy-day fund.

Alexandra, a management consultant from London, was not happy with the rate provided with her cash ISA – where you can earn interest on your savings tax-free – so she decided to switch providers to get more for her money.

While looking around online, she came across Plum, which had a higher interest rate and said it could help her put away extra cash without realising. It currently pays her an above-average rate of 3.65 per cent.

Interest on Plum Cash ISA may vary and apply a bonus rate in the first 12 months. ISA rules and T&Cs apply. Plum is not a bank.

Plum aims to make saving simple by using technology to analyse your bank account, including your income and spending habits, to determine how much you can afford to save without feeling restricted. It then automatically sets this amount aside for you at regular intervals.

You can also use several features and rules1 to help save extra, such as the “round-up” rule, where every time you spend, Plum rounds it up to the nearest pound and puts the extra into your savings account.

Alexandra has found the round-up feature really useful for saving without noticing. She also uses Plum’s “naughty” rule, where you can effectively tax yourself for spending money at certain retailers, and that extra money goes into your savings account.

“I love all of the rules you can set up to help you save,” Alexandra said. “I use the naughty rule to stop myself from spending on coffee and fast fashion, and knowing I will tax myself for it has encouraged me to spend less.

“For me, these features take away the mental labour of saving. They help put aside small, incremental amounts over time, so it doesn’t feel like a burden.

“Trying to save, say, 20 per cent of what you earn every month feels overwhelming, but putting aside tiny amounts is just easier to manage mentally.”

Fun savings challenges

Alexandra has also tried doing some of the more fun challenges, such as the 1p challenge.

This is a simple saving challenge where you start by saving 1p, and then you add one penny to the amount you save each day for 365 days. So save 1p on day one, add 2p day two, add 3p on day three, and so on. At the end, you will have saved £667.95.

“Without a doubt, using Plum has helped me save thousands of pounds more than using a regular bank or savings provider,” Alexandra said. “It’s really easy to use, the interface is simple, and you can clearly see your savings pots. Online banking can be quite joyless, but Plum has elevated it a bit.”

Plum also helps savers invest to grow their money. While traditional investing strategies such as the 60/40 portfolio are being questioned by experts, Plum offers a more modern and flexible approach.

The 60/40 portfolio is a traditional method of investing where you put 60 per cent of your money into stocks and shares and 40 per cent into “safer” products, such as bonds.

But Plum acknowledges that a fixed, one-size-fits-all approach doesn’t work for everyone, instead focusing on flexible, managed funds that adapt to your risk appetite and market conditions.

Plum simplifies the process, offering a range of professionally-managed funds designed to suit different risk appetites.

Keep in mind that. as with all investments, your capital is at risk and you may get back less than you invested. Also, this is not financial advice – always do your own research.

This includes options from “safe haven” funds for more cautious investors, like Alexandra.

Many savers are hesitant to invest their money because they are scared of losing it. However, the typical returns from investing your money have historically been much better than what you can earn from putting your money in a savings account long term. (Past performance is not a reliable indicator of future results.)

1 Some rules are available with a paid subscription