Save Money

A survey by the Money and Pensions Service found that 21% of people rarely or never saved and that 22% have less that £100 in savings.

Saving money is a habit that is easy to
pick up and has multiple rewards. There are many ways you can save money, such
as switching brands on your shopping or switching your energy or broadband
provider.  

Getting into the savings habit

We’ve all been told it’s good to save, but what exactly are you saving for and where should you save it?

Why bother saving?

There are three main reasons for saving regularly:

• For emergencies: to make sure there’s money available if something unexpected happens, like your car breaking down.
• To fund luxuries: this might include a holiday or buying a new car, or things such as a tablet, computer or new phone.
• To live comfortably in the future: although it might seem very far away, once you stop working, your income will go down and you’ll probably have to rely on money you’ve saved to keep up your standard of living.

Emergency savings – how much is enough?

Everyone should prepare for sudden expenses by regularly putting money aside for things like a broken washing machine or boiler – but there is such a thing as too much emergency cash. It’s best to split your savings, so you’re keeping some to hand for emergencies and putting the rest where it can work harder for you.

How much should I save?

You want to be able to pay for an unexpected repair, but it’s also important to have enough money for a few months in a sticky situation. Say you lost your job or split up with your partner, and needed some time to get back on your feet – you’ll want a bit more than the cost of a new boiler or washing machine. If money’s short, start small For example, saving just £3 a day adds up to £1,095 over a year. As long as you’re getting into the savings habit, you’re making progress, and small sums quickly add up.

The rule of thumb

A good rule of thumb to give yourself a solid financial cushion is to have three months’ essential outgoings available in an instant access savings account. So if you lose your job, for example, it’ll help buy you three months to find a new one. So, if you spend £1,000 a month on mortgage or rent, food, heating bills and other things you can’t live without, you should aim for £3,000 in emergency savings. But, remember any amount saved will help you if you have to pay for something you weren’t expecting. Working out how much for your current situation You can also base the amount you think you’ll need on the expenses you think you might have to cover. So, if your car is getting old and has a couple of advisories from its MOT, you could factor in a figure of £1,000 into your emergency savings fund. These amounts might seem daunting at first. That’s why it’s important to break down your goals and take your time to save with manageable, smaller, regular amounts.