Getting started with saving
We’re all told from a very early age that we should save – first of all in piggy banks, then a deposit account. Then when you begin to earn, there’s a whole range of accounts to help set aside money to meet your lifetime goals.
As a building society, The Nottingham has over 165 years of experience in helping people’s savings grow.
Getting started is easier than you think. Even if you don’t have wads of notes stashed under the bed, there are many ways to organise your spending and save regularly – and lots of help available to make your savings work for you.
Sensible saving allows you flexibility and freedom in the future to do exactly what you want to do.
Think about your goals, your time frame, your budget – and stick to it!
1. Which savings product suits you best?
The interest rate isn’t the only thing to think about when you want to set aside money for the future. You might need easy access to your money, or want to save a regular amount every pay day – or save for a specific purchase such as a car, school fees or deposit on a house. Here’s our guide to different types of savings accounts.
2. What access will you need to your savings?
Some accounts make it easy for you to withdraw money as you need to – these are known as easy access accounts – although this might result in a lower interest rate. Others can limit the number of withdrawals (known as limited access accounts), while some lock your money away for an agreed time (fixed accounts).
3. Understand how much interest you will get on your savings
Different accounts offer different rates of interest. The amount of interest you earn may depend on whether your account is operated in branch or online and the access you want to your money. The interest rate will vary according to the amount of money in the account and when the interest is paid (daily or monthly). Saving a regular amount each month will give you a different result compared to investing a lump sum at the start.
4. Decide how much you can afford to save
The amount you can save will depend on your personal circumstances. Experts suggest you should have around three months of wages easily at hand in case of emergencies, such as illness or when the central heating breaks down. But we know this isn’t aways that easy to do. If you can’t lock away a set amount of money, no matter how old you are, setting aside a little money every month – either from your wages or when it’s your birthday – can build your long-term wealth.
5. Decide if you want to invest a lump sum
Have you sold your home, inherited a windfall, won the lottery or cashed in a pension? A good place to invest a lump sum is in a fixed account where you won’t be tempted to dip into it. But that’s not the only option when it comes to saving and It’s always best to get good financial advice and The Nottingham can put you in touch with independent experts who will look at all the options available to you – not just our own range of products.
6. Make saving money a habit
Regular savings accounts are for people who want to make a habit of saving, usually little and often, perhaps with a deposit each pay day. Usually it is an “everyday” account for people, who don’t want to worry about all the details but still want their money to grow.
If you don’t think you have spare cash, It is possible to work out what you spend and then budget to help you save money you can later deposit into an account. Shop around for the best deal to help reduce recurring bills, cutting down on luxuries – and even reducing the number of TV channels beaming into your home! If you can set up a standing order or direct debit, you’ll soon see the account build up.
7. Make sure you use your tax-free annual ISA allowance each year
ISAs are an interest-free savings account, called Individual Savings Accounts. There is an annual investment limit – and like other savings accounts they can give you easy access to your money or be part of a longer term plan.
8. Think about how you want to manage your savings
Keep on top of your account. Some pay high interest for a limited period and then go off the boil. It may be that you have to switch accounts or ISAs on a regular basis to get the most out of them.
9. Get your children into the habit of saving
Children are always being given money! But they don’t have to spend it all at once. Savings accounts designed specifically for children exist and will help them get into good habits early in life.
10. Choose a reputable savings provider
Customer service and expert advice are important. Make sure the savings provider you choose is allied to industry associations and is properly authorised and regulated. Keeping your hard-earned money in a UK regulated bank or building society account means it should be protected by the Financial Services Compensation Scheme. Up to £85,000 per person, per financial institution, is guaranteed.