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How to boost your future wealth for the price of a night out

Britons are spending more on nights out than at any point in the last three years. We consider two reasons why savers and investors might be willing to make small changes to their monthly budget.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

We’re spending more on nights out than at any point in the last three years, according to a recent survey.

The average person now spends £70.69 on an evening’s entertainment, up 25% on the same period last year, and the highest since October 2016 when the survey began. The spending covered all kinds of nights out – from trips to a cinema or restaurant, to an evening at a pub or nightclub. 61% of people went on a night out at least once a week, up from 56.2% last year.

Don’t worry – we’re not about to suggest you forego all forms of fun in order to save and invest all your spare cash. But these numbers did get us thinking. If they could, would people be as willing to increase the amount they save by 25% year on year?

Here are two reasons why you might consider it. This article is not personal advice. If unsure of an investment or course of action for your circumstances, please seek advice.

A little goes a long way

Whatever you currently invest, even a small increase could make a big difference over time.

And the sooner you make the change, the bigger that difference could be. This is because any extra money you invest will have longer to grow – boosted by the power of compounding.

Watch this video for a reminder of how compounding can help to boost your long term investment returns.

The figures shown in this video aren’t guaranteed. And they don’t take inflation or charges into account. All investments can fall as well as rise in value, so you could get back less than you invest.

One way to take advantage of the power of compounding is by increasing the amount you save or invest each month (or by starting a Direct Debit if you don’t already have one). With HL, you can get set up from just £25 a month.

Learn more about regular investing

To get an idea of how even a small increase to the amount you invest could impact your returns, try our calculator. Maybe you’ve decided you want to cut one night out a month, or you want to get a higher return on the cash you already put aside each payday.

Whatever your current situation, you can use the calculator to test a few different scenarios.

Try the calculator

Happy hour boost for savers and investors

Many bars and nightclubs use happy hours to lure in partygoers. They incentivise you to choose their venue, in the hope that you’ll spend more money.

The government works in a slightly different way, with different objectives. But they do provide incentives to encourage certain behaviours – particularly when it comes to saving more money.

This is the second reason you might consider increasing the amount you save or invest, even if only by a small amount.

Depending on your stage of life, two financial incentives to save are Lifetime ISA bonus payments and tax relief on pension contributions. Pension and tax rules can change and their benefits depend on your circumstances.

A Lifetime ISA is a flexible way to save and invest for your first home or later life. You can invest up to £4,000 each tax year and the government will add a further 25%. So for every £4 you save, you get £1 extra - up to £1,000 per tax year.

You need to be between 18 and 39 to open a Lifetime ISA. But you can still pay in – and get the government bonus – until you turn 50.

Invest up to £4,000 each tax year and recieve a government bonus of 25%

After 12 months from the first payment, you can use the money to make an eligible house purchase for a property worth up to £450,000. Or you can wait until you're 60 and take your money out after that.

If you want to take money out before you're 60 and you aren't buying your first home, there's usually a 25% government charge. That means you could get back less than you originally put in.

Find out more about Lifetime ISAs

In a similar way, no matter how much tax you pay, the government will add 20% in tax relief to your pension. So if you put £8,000 in your pension, the government will add an extra £2,000, bringing the total amount to £10,000.

Higher and top-rate taxpayers can receive tax relief up to as much as 45%, although that will be different for Scottish tax payers. But remember pensions are meant for your retirement, so you can’t usually access your money until after your 55th birthday (57th from 2028).

Invest up to £40,000 each tax year and recieve tax relief up to 45%

Learn more about tax relief and how it works

Try our pension calculator

These are just two examples of how the government incentivise you to save and invest.

But both show how even saving a small amount could bring benefits.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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