**Disclaimer – I am not a qualified Financial Advisor, the below information is gleaned from my own personal experience. None of the links are sponsored or affiliate**
I think of myself as a pretty savvy saver. I make a point of saving some money every month, and the money I save works hard for me so I get a decent return. However, I do also like to keep things simple. I want a good rate, but I also want easy access. I have no desire to look into investing, and I don’t want to be moving money around every few weeks. So here are my tips for becoming a smart but straightforward saver!
Pay off debt first
The jury’s out on this – should you pay off all debt before considering saving, or should you should save a little while paying off? I can see both sides, but what worked for me was the latter. I was paying off 12K of debt but I also put a fiver a month into an ISA. I had absolutely no savings other than this, but seeing that balance grow, month by month, was a futher incentive to ditch the debt and save even more. But this isn’t a tactic for everyone. Think long and hard about whether you’d be better chucking all money at your debt, or if a small savings account would give you a boost. But the bottom line is, the debt must be your priority.
Do your research
I’ll be honest, this is really boring stuff but it needs to be considered. You want your money to work hard, so you need a good an interest rate, but also look at access; some accounts may have a good interest rate but need up to 120 days notice before a withdrawl. Some may ask for a large initial deposit, and some charge a fee for withdrawls, and many don’t allow ATM withdrawls. My one-stop shop for all this stuff is Martin Lewis’s Money Saving Expert website. It has the most up-to-date rates and impartial advice. I’d recommend only doing this once a year though – or less often if you can get a decent rate that lasts a couple of years. Its easy to get fatigued and overwhelmed if you switch accounts too often.
Pay yourself first
The worst way to save is to wait and see what’s left at the end of the month, and put that into your savings account. Because there will never be anything left at the end of the month. The most disciplined way to save is to transfer a certain amount to your savings accounts on/around payday, so its as if you never had that money. Therefore there will be no desire to spend it, and it soon becomes habit. How much you save depends on your salary and outgoings. Usually at least 10% is a good idea. The only surefire way to know, is to do a realistic budget. You want to save a reasonable amount but at the same time you don’t want to leave yourself short of cash.
Set up targeted accounts
Saving up for something in particular? A holiday? A car? A house deposit? A rainy day? Start an account for each. I have about six savings accounts and I rename them depending on what I’m saving for. Targeted accounts mean you’ll stay focused and you won’t get sidetracked spending money that’s earmarked for one thing, on something else. Plus it means you can set specific savings goals and you’ll know exactly when you’ve achieved them.
Consider a Stocks & Shares ISA
I could never be bothered with the faff of investing in stocks and shares themselves, but a S&S ISA is the next best thing. Interst rates on Cash ISAs (and most savings accounts) are pathetic these days, so a S&S ISA is a great low risk alternative with a gerenally decent return. A S&S ISA means your money is spread across shares in various sectors so if one sector crashes, you won’t lose everything. And the best part is, you don’t have to do anything. Just pay the money into your account and let a Fund Manager do the rest. To give you an idea, I took out a S&S ISA 6 years ago and paid in £500. That £500 now fluctuates between £800 and £900 on a given day. That’s an impressive interest rate.
Keep up to date with changes
Sometimes the rules change, or new products are made available. For example, the ISA allowance went up to £15,240 in April 2015. Or if you’re a first time buyer saving for a house, a Help-To-Buy ISA will be ideal for you – they start on 1st December (the Government will top up what you save by 25%). Money Saving Expert is a great resourse for keeping up to date with things like this aswell.
Are you a savvy saver? Do you have any tips to add?