Most people realise the importance of saving money on a regular basis. If we live to our means every month – or worse, beyond our means – there is no room left for savings. All it takes is one unexpected bill to come along and we are left in debt.
The best way to save is to do it every month. The most successful savers are those who set up a direct debit to funnel a specific amount of cash into a savings fund each month as soon as they get paid. The danger is in deciding to sweep some cash over at the end of the month, because by that time you may find you don’t have any cash left to save.
Another important thing to remember is to consider the wide range of savings options available today. If you pay tax you should make the most of having a tax free Cash ISA to begin with, as you will earn more interest on the money you manage to save. There is an annual limit on the amount you can save, but it is well worth getting one of these accounts before investing elsewhere.
Many people like to have instant access savings too, just in case of emergencies. Six months’ worth of income is the perfect amount to keep in this type of account. It will be there whenever you need it and it provides you with real peace of mind as well. If you are starting with no savings at all, work on building up this account before looking at Cash ISAs and other accounts. By doing this you will have a safety net to help you cope with unexpected expenses.
As you can see you don’t have to limit yourself to just one savings account. The idea is to consider your own individual needs and goals so you can identify the right types of accounts for your own circumstances. This may differ for everyone, so do your research and ensure you find the best options in your situation.
Another point to remember is that different accounts have different interest rates attached to them. Generally speaking the longer you are willing to invest your money for, the more interest you can potentially earn on it. Make sure you shop around to find the best accounts and rates you can, as this will invariably reap bigger rewards than if you were to opt for the first account you find.
The bottom line is that savings account are essential for everyone to have. Even if you start by saving just £10 a month, the habit you will develop through doing so will very likely lead to even bigger savings and rewards in the future.
Jesse Wallace writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.
