Saving is a great habit to get into – choose to save your spare money the best way for you with our top tips!
If you’re saving for that holiday you’ve been looking forward to, for the car of your dreams, or even for a rainy day – saving, even a little bit, is a great habit to get into.
Despite the borrowing options open to you today, saving is still the best way to buy anything you need. Not only do you stay out of debt (which means you won’t have to pay interest), but by saving you can earn interest instead.
But stashing your cash under your mattress, or even in your everyday current account, is no good as you won’t be earning interest on it. Instead, choose to save your spare money the best way for you:
Cash ISAs – one of the most popular savings accounts, mainly because the interest you earn on your money is tax free. A range of financial services companies offer cash ISAs and you need to shop around to get the best interest rate and product for you. Because of the tax advantages, there are limits to how much you can save in a cash ISA. You can currently save up to £3,600 a year (and from April that will increase to £5,100) in cash with one provider.
Savings Accounts – banks, building societies & credit unions offer all different types of savings account. Shop around for the one that suits your needs, as they all have different features:
Interest rates – generally, you look for a higher interest rate. Be aware that some accounts offer a high rate for an introductory period, and then it drops. Other accounts offer a rate that varies according to how much money you have in the account, or how much notice you need to give to withdraw your money.
a) The way interest is added – some do it yearly, some monthly
b) Notice periods – you may need to give notice to withdraw your money, or pay a penalty to withdraw your money early
c) Limits on how much you can save – some accounts require a minimum amount
National Savings & Investments – these are available online, or at your local post office. There are many different types available such as Premium Bonds or Growth Bonds that are all backed by the government.
For more information about managing your money, check out whataboutmoney.info.