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Now’s the time to think about how you’re saving

Do you know the importance of having a financial buffer in the bank? Getting into the habit of putting something away each month can pay dividends in the future.

A report by Scottish Widows has revealed one in four people in the UK aren’t saving anything at the moment and 18% have no savings at all.  

The research also highlighted that more than four in ten people said not knowing how to go about saving or investing was a barrier to saving.

23% said they would be inclined to save more if savings options were generally easy to understand.

Why should you save?

We all know we should be saving but what should you be saving for?

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.

If you ever have any money left over at the end of the week or month that you don’t need for essentials, try to save it. Think about saving once you’ve paid your main bills.

If you find that you can do this, then try to save at least 5% of your income – the more you’re able to save, the better.

If you’re thinking about your savings, but aren’t sure how to go about it, it’s worth considering budgeting. This doesn’t have to be scary – it’s simply a list of your incomings and outgoings. Our Budget Planner can help you out.

How should you save?

One of the quickest ways to get your savings working for you is to set up a standing order (a regular payment) from a bank current account into your chosen savings account.

That way you won’t have to remember to make the payment and you won’t be tempted to skip a month.


Did you know you don't always have to pay tax on your savings?

Making sure you don’t pay more tax than you need to can be a great way to help build your savings.

New Individual Savings Accounts (NISAs) are tax-efficient savings and investment accounts.

On 1 July 2014, Cash ISAs and Stocks and shares ISAs were merged into a new single ISA (NISA) with a much higher limit of £15,000 per year.

You can either pay your whole allowance of £15,000 into a Stocks and shares NISA, or into a Cash NISA or a combination of the both.

You pay no Income Tax on the interest or dividends you receive from an ISA and any profits from investments are free of Capital Gains Tax.

It’s a good idea to think about your NISA allowance before the end of the current tax year (which runs until 5 April 2015). This is because your tax-free allowance runs from year to year, so you should think about how to maximise it while you can.

On 6 April 2015, your ISA allowance will increase to £15,240.

Do you have savings? Do you know how to maximise them?

 

 

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  • Shanin lewis / 20 March 2015

    Been trying for the last year to bring done my spendings that helps me for my budget,as I am not working anymore after 32 years.
    Not easy at all and look forward to see the tips can be given to encarrage and help.