Top tips for saving
Author: Isla Campbell
Category: Finance
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If you've been thinking of saving for that special something, now is a good time to open an account as despite base rate falls, interest rates for some types of deposit accounts are still extremely attractive. But, before you begin on the route to regular saving there are a few things you can do to make sure that you get the most out of your new financial resolution.
First, there is little point saving money if you owe money on credit cards or loans. The interest rates you will be paying for your credit card and loan balances will be much higher than the rate of interest you can get for a regular saving account. Pay them off before starting to save.
The only exception to that rule is if you have any borrowing based on a 0% interest or reduced rate deal. In that case save as much as you can in an interest-bearing account, but make sure to withdraw the entire amount, if necessary, to pay off your credit card or loan balances before their promotional rate expires. That way you will accumulate more interest than you are paying, allowing you to pay off more of your debt balances when they all due. Additionally, you will also get into the habit of saving regularly, so once you have cleared your debt saving becomes even easier.
Making sure you are realistic about the amount you can save is critical. You should avoid cutting out treats altogether and definitely not proceed into a new realm of austerity in an attempt to maximise your savings. Your lifestyle should not be adversely affected to the extent that there is no room for fun and enjoyment; do cut out non-essential luxuries but do not retreat from your social life.
It is also important to consider how quickly you will need access to your savings. Work out whether you need to have instant access to your money or whether you can plan to give a comfortable period of notice, say anywhere between one and three months. Instant access accounts normally pay a less favourable interest rate, whereas a high interest savings account does what it says on the tin, paying out more interest but usually in exchange for limited access. The longer you can leave your cash untouched in the account the more you will earn. Savings accounts online usually carry higher interest rates, so do your research and check rates before opening an account.
Do set up automatic transfers from your current account directly into your savings accounts. This is best done immediately after payday, along with your direct debits and bill payments rather than waiting until the end of the month when you might be tempted to dip into your current account. If the money is already gone you can't touch it!
Overall, stay focused and ensure that you keep to your savings plan by setting yourself regular goals that will keep you motivated. Before you know it you will have a tidy little sum set aside in a savings account that can be used for a special purchase or simply to provide for a rainy day ahead.
Disclaimer: This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.
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Keywords: high interest savings account, savings accounts online, direct debits, bill payments, instant access accounts, automatic transfers
View Count: 55
Date Submitted: 6/6/2008
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