With the economy in financial freefall, and talks of a triple dip recession on the horizon, many people will be using up their savings, rather than putting money away. But if you have been canny enough to pop a few quid away, where is the best place to keep your savings? And don’t worry if you haven’t managed to save, we have still got some great tips for first time savers.
1. Our first tip, if you have money in a savings account, is to shop around to make sure that you have your money in an account with the highest interest rate possible. Use comparison sites to ensure that your money is working for you, and before you switch your money, make sure that you won’t incur any penalty charges. Some good savings accounts for 2013 are paying around 2 to 3% in interest, but if you have up to £3,000 to save, then check out The Barclays Bank Monthly Savings Account, which is paying 3.25% for a maximum of £3K.
2. If you tend to spend money as soon as you get it, try putting a regular amount into an account where you cannot easily get to it. A regular savings account means that you cannot touch the money for a period of time without a penalty. Or you could try a postal account that would make access to your funds more difficult for an impulse purchase.
3. Which ever savings account you go for, you should always consider an ISA, which is a tax free form of saving. If you are a UK tax payer, you also pay tax on the interest you make on your savings. However, you can get round this by opting for an ISA, which allows you £5,340 tax free savings allowance for cash and if you have shares it’s up to £10,680. This means that an ISA is almost always going to be the best place for your money.
4. People that are not used to saving should get into the habit by setting up a standing order, as soon as they have been paid, which then goes directly into whichever savings account they have chosen. This will help you budget for the rest of the month.
5. Work out your financial monthly budget and put EVERYTHING that you spend money on, in it. Whether it’s that latte you get on the way to work, or the Saturday night take away, make sure it is included. There’s no point getting the best savings account for you to cancel the direct debit because you do not have the funds.
6. Now that you have worked out your monthly budget, you can also see where you could possibly save a few quid. Do you really need those after work drinks at the pub every Wednesday? Could you buy a cheaper wrinkle cream perhaps? There are plenty of places where you could make possible savings.
7. One way to make a saving on what you buy is to shop savvy. This means that rather than go for branded products in a supermarket, check out the stores’ own brands. Just by taking one step down in price will save you cash.
8. If by any chance you happen to have surplus income, reduce debts or put away into a savings account. You should always pay off credit cards, loans or other creditors before you attempt to start saving. The interest you pay on your debts is always far greater than the interest you would get on your savings.
9. A good tactic is to open two different bank accounts. Have one for essentials, such as direct debits for rent, the mortgage, gas and electricity, water bills etc and the other can be for luxuries e.g. socialising, clothes.
10. Many people find it hard to save if they are not actually saving for a specific thing. So decide on something that you really want, like a new TV, holiday, car, and stick a picture of it up on the fridge, or in your office, where you will see it frequently. This will keep you motivated.