Our savings advice outlines the importance of saving as a means to becoming financially independent when setting up savings in the short term and for the long-term. It's a lot easier than it sounds - you'll feel a lot better once you start doing it.
- Savings in the short term
If you have some spare money at the end of the month, then you should think about starting to save a little.
- Savings in the long term
Once you've sorted out a basic instant access account for emergencies, you should be considering putting some extra money away for the future and your retirement. Now is the time to find out how.
- Try to save a monthly amount of any pay rise that you get and put aside part of any bonus you receive.
- Do your sums – find out exactly how much you need to save monthly, and over what period, in order to achieve that goal. Set up a budget on your expenditure. Our Keeping a budget - the basics will help you do this.
- Be disciplined and set a savings goal and stick to it such as something you really want to save for. Whether it's a holiday, a new car or a deposit for a mortgage, having something to aim for, is by far the best way to motivate yourself.
- You can often get extra interest if you are prepared to tie up your money for a set number of months with a term deposit or savings bond.
- Products which tie your money up for a long period may offer a better return. It pays to make sure you only put money in there which you won't need.
- Control your spending at the same time as saving. Keep a particularly close watch on your credit card use and on ATM withdrawals to track impulse spending.
- Talk to your financial provider and discover the best way to balance saving with other priorities, such as building up your pension or planning for your children's education.
- When you do spend, do it in a controlled way – for example, give yourself a budget to enjoy yourself at the weekend but take it out in advance and stick to it.
- Set up a direct debit to make saving more painless – you don't have to make the commitment all over again every month, it just happens automatically.
- Review your savings portfolio at least once a year – and make sure it fits your requirements as well as it did when you first set it up.
- Don't go with the first savings plan you see, look for one with terms and an interest rate that suits you.
- Start saving as early as possible. Putting your money away as soon as you get paid will ensure that your savings are never forgotten.
- Think of saving as prepaying for something, rather than putting away money you'll never use.
- Consider taking advantage of interest rate changes by paying extra into your mortgage, if possible. This will save you thousands in the long-term.
Do start today. Stop putting it on the long finger because the sooner you start saving the better.
Savings in the long term
More and more of us are now living longer, so at some point it makes sense to plan ahead and start paying into a pension. Speak with your employer to see if they provide one or are prepared to contribute on your behalf because some employers will match any money you put in yourself. The sooner you begin paying in, the higher your income is likely to be when you retire
You're never too young to make a will. If you die without one, your assets may be distributed according to the law rather than how you'd like. By sorting it out early, you can also make sure you don't pay more inheritance tax than necessary.
To a lot of people, savings - and particularly investments - can seem complicated. So getting the right kind of advice can help you be confident in what you're doing.
To kick start your savings in the short and for the long term, start small and keep building as saving some money however small, will give you peace of mind rather than spending all of it. Meet with a Financial Adviser to discuss your financial goals and put an achievable plan in place to reach these.
In short, when managing your money take these small steps towards financial peace of mind:
- Face facts - be honest with yourself about how much you're currently spending.
- Make a budget and stick to it - remember it's all about spending less than you earn.
- Plan ahead - start saving for the times when you have to pay for something unexpected.
- Keep good habits - lots of little changes to your lifestyle can add up to big savings.
- No more worries - sorting out your finances will make you happier and free to do the things you most want to do in life.
Go back to EBS Family Finance