How anyone can become a savings expert

One of the best things you can do for your financial future is get better at saving today. Being a savings expert needn’t be restricted to the financial super savvy – check out our tips below to learn how to be a better saver today.

Set saving goals and treat it as a hobby

Everyone gets the Monday blues right? That feeling that you want to just rollover when your alarm rings and fall back asleep – but the bills won’t pay for themselves.

So ask yourself what would be your ideal dream? A popular answer would be: to get rich, then retire early - hold that thought; you’ve just found your main goal for saving.

From there, simply draw up a budget sheet detailing all your monthly outgoings and expenditure, then what remains is your monthly disposable income. A good suggestion would be to put a portion of this money aside and set up an automated monthly payment into a high-interest account – it won’t even feel like your you’re saving!

Watching your money grow is a great hobby, so make sure that you regularly take a look at your high-interest account; it’s immensely satisfying seeing the pounds mount up. It also allows you to have that odd spending spree, or maybe fork out for the upkeep of an item.

Make your savings work hard for you

Although interest rates are currently a lot lower than they have been in previous years, there are still some great savings accounts out there, and the competition between lenders means that the interest rates have finally started to creep up.

Before delving into the world of savings accounts we would suggest thinking about if you wish to access your cash on a regular basis, or if you can afford for it to be locked a way for a period – the outcome will steer you towards your suited account. This is a good guide on how to choose the right savings account for you.

Easy Access Savings Accounts

An Easy Access Savings account, essentially means that you pay cash in, you earn interest while money is in the account and you can withdraw whenever you want. One thing to note is that interest rates tend to be lower when compared to fixed rate savings accounts, as this is the trade you make for having the ability to access your cash instantly. Also, some easy access accounts may limit the number of withdrawals you can make per year and others won't pay interest in any month a withdrawal is made.

A Regular Savings Account could be a consideration if you wish to put some money away each month and still have the flexibility to withdraw your cash whenever. What’s better is that you can earn anything up to 5% interest in such an account.

Savings accounts with bonuses only really benefit new customers. If you are to take one of these accounts out please check your terms, the interest rate will be sure to sink once the term has passed.

Current accounts with savings

The interest rates on these accounts tend to be quite low, but can be better than an Easy Access Account and sometimes the interest rates can be fixed; meaning that you will gain the same amount back for the term of your agreement.

Please remember though, to keep your eyes peeled as to whether the interest rate is variable and be aware that you will normally have to undergo a credit check to open one.

Other nice options that accompany these types of accounts are the incentives to switch and cashback perks. Some accounts will offer £100 for example if you switch to them, but they require you to place a large amount into the account each month for the pleasure. The same institutions may also give you money off shopping in some establishments.

Fixed Rate Savings Accounts

Fixed Rate Accounts/Bonds are just savings accounts which give a guaranteed rate of interest over a period of time and are usually more competitive than the accounts discussed above. The sticking point with these accounts is that you need to be prepared to lock your cash away for the entire term.

Notice Savings Accounts

If you don't want to lock away your cash, notice accounts could be a winner instead. Generally, the more notice you can give, the better the interest rate you'll get.

The savings account verdict…

All in all, if you hold a savings account for long enough interest rates will drop. That’s why we suggest watching interest rates and moving your money to pastures new if they fail to meet the mark.

Make the most of tax efficient savings

Individual Savings Accounts (ISAs)

These are tax-efficient investment accounts which usually come in the form of a Cash ISA or Stocks and Shares ISA. Each year you are granted with a £20,000 tax free allowance to invest in either of these, or a combination of them both. The benefit is that you will not pay any Income Tax on the interest or dividends that you receive and any profits from investments are free of Capital Gains Tax.

Read more on Individual Savings Accounts (ISAs) here.

Help To Buy ISA

A Help to Buy ISA is designed to help first-time buyers save towards the cost of buying their first home. You can make an initial deposit of £1,200 when you open a Help to Buy ISA and then receive £50 for every £200 saved up to a maximum of £12,000 They are limited to one per person rather than household and you cannot contribute to a Cash ISA in the same tax year.

Read more here on Help to Buy ISA

Lifetime ISA

This is a longer-term form of tax free savings that will allow you to save up to £4,000 per year and you can get a government bonus of 25% up to £1,000. It is aimed at first-time buyers or people who wish to save for their retirement between the ages of 18 and 40. Also, as with all ISAs you will not pay any tax, income or capital gains from cash held within a Lifetime ISA.

Read more on a Lifetime ISA here

National Savings and Investments (NS&I)

This form of saving is classed as “safe” as it is totally backed by the Government. The range of tax-free savings that they offer are: Cash ISAs, Children’s Bonds, Tax Free Savings Certificates and Premium Bonds.

Premium Bonds are by far the most popular form of investment with NS&I and they also hold an element of excitement for the owners; as each month you are entered into a prize draw where you can win anything between £25 and £1,000,000 tax free.

Read more on National Savings and Investments (NS&I) here.

Pension Savings

The government encourages you to save for your retirement by giving you tax relief on pension contributions. You can even receive tax relief on pension payments up to 100% of your earnings up to a maximum of £40,000 in any tax year. But although this is very attractive, you will not be able to access the funds until you reach the age of 55.

Read more on Pension savings here.

Tax free interest on bank and building society accounts Everyone is entitled to a savings allowance; this means you don’t pay tax on the first £1,000 you earn from savings (or the first £500 if you’re a higher rate taxpayer).

Read more on Tax free interest on bank and building society accounts here.

Living to your means and money saving musts

Have you ever heard of the expression “cutting your cloth accordingly” or “living to your means?”

With that thought in mind, most of us will agree that we all need an element of that in our lives, but not at the detriment of living a little. A suggestion would be to make sure that you put a small portion of your income aside for you to enjoy as you see fit while saving at the same time.

Another money saving must is to look out for as many offers as possible, challenge your current suppliers rates and simply shop around:

  • Eating out - spare a second to search for any offer codes online, or visit during their ‘early bird’ or ‘happy hour’ slots.
  • Holiday shopping - shop around for the best deals out there; you’ll be surprised how prices differ per website/supplier.
  • Car/home insurance – when these are up for renewal don’t just go with the flow and let your provider increase your premium, take a look at some of the many comparison websites out there and switch to another supplier for a better deal.
  • Energy and household suppliers – each year prices seem to rise, but some rise more quickly than others. Also, many suppliers seem to pull out all the stops for new customers. With this in mind it is always worth shopping around to see if you can save some money.
  • Using cashback credit cards – these can also work in your favour as long as you pay off the balance each month. Suppliers will reward you by using your card in certain establishments, so you could get cashback for shopping in your usual way – money for nothing.
  • Cashback sites – these are a recent addition to the savings spectrum, where people make purchases through such sites and receive money off, but remember they rarely give you anything for free!

Conclusion

By utilising these tips, anyone can become a money saving expert and start making their hard-earned cash work harder.