It’s probably been on your to-do list for a while, but starting a savings plan doesn’t have to be such a chore. Follow our guide to piling up the pounds…
1. What are you saving for?
The first step in setting up a savings plan is to determine why you need it. Who and what are you saving for? A house deposit perhaps, an education fund for your child… or maybe you’re saving for Christmas or your next summer holiday? The purpose of the savings plan will help to establish how you set it up.
2. When do you want the money?
Are you putting money aside for your retirement or saving for a wedding in 18 months’ time? Many savings accounts can penalise you for taking money out early, so to avoid unnecessary costs make sure you’re clear about when you want to use the money.
3. A combination of accounts
You may find you need a few different accounts to meet your savings goals, but be careful you don’t end up paying too much in bank fees. Talk to a couple of providers and ask them if they can give you a deal on multiple accounts.
4. Use your tax-free allowance
Any savings plan should include a tax-free account or an ISA account. ISAs allow you to save a certain amount of money each year without paying tax on your interest. They do have a yearly limit though, so you may want to set up other savings accounts as well if you’re planning on putting away a lot of funds.
5. Look for good interest rates
While your money is in the bank you want it to work for you. Accounts with high interest rates will bring you a greater return on your investment. However, these accounts usually require you to lock your money away for an extended period of time.
6. Short and long-term deposits
Putting money away for both the short and long term will give you peace of mind that some of your savings will be available should you need them unexpectedly. Always check the terms to make sure you can access your money if you need to.
7. Research different providers
Most banks and other investment organisations offer similar packages so take the time to find one that best suits your savings goals. Some savings products invest in stocks and shares and carry more risks then a basic savings account, but they can deliver bigger returns. You can make an appointment with an independent financial adviser for some expert advice.
8. Make deposits regularly
The key to a successful savings plan is to contribute regularly. Work out what you can afford to set aside each month and set up a standing order or direct debit.
9. Keep an eye on them
Make sure you check your savings account statements, so you can see what kind of return you’re getting and how much you’re saving. If you see a better savings account advertised, speak with your bank to see if they can match that rate.
10. Reward yourself
Set yourself a savings goal and reward yourself once you reach it. Little goals and celebrations along the way will help you keep your focus. Buy yourself a new pair of shoes, a dinner out or a weekend away.