Savings Guide

Savings – Getting into the habit

Writes Hazel Cottrell hazel.cottrell@consumerchoices.co.uk

Want to get into the savings habit but don’t know how to start? We show you the best way to save, whatever your money personality… (Updated 12/8/09)

The idea of saving can seem like a chore, and worryingly over a quarter of UK adults have admitted that they don’t save at all, according to Nationwide (www.nationwide.co.uk) research carried out in June 2009.

However, once you get into the habit it becomes easy and can be very rewarding - making a little effort to save now could have a dramatic effect on your future and is certainly a prudent move in the current uncertain times.

Sainsburys Easy Saver

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	Earn 2.75% by investing from £1000 in the Alliance & Leicester Online Saver Account

Whether you want to save up for something special, like a wedding or new car, or whether you just want the security of knowing you’ve got a rainy day fund to call upon in emergencies, the key to saving is finding a style that suits you.

There are lots of different ways to get into the savings habit, and different methods will suit different people. So why not take a look at our savings personalities below, see which style (or combination of styles) appeals to you, and start saving today!

The brand new saver

Money personality -You are just starting to build up your nest egg and want to get the best returns on your hard earned cash.

Savings solution – For new savers, cash ISAs should be the first destination for cash. While the interest you get on standard savings accounts is taxed at 20% (or 40% if you are a higher-rate tax-payer), any interest you receive on a cash ISA comes to you completely tax-free. You can save up to £3,600 in a cash ISA each tax year and you should try to use as much of your allowance as you can each year as it doesn’t roll over to the next. Look for an ISA offering a high interest rate that doesn’t require a high initial investment. Compare cah ISAs now.

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The forgetful saver

Money personality - You keep meaning to save but the idea always seems to slip your mind when you’re at the bank.

Savings solution - Set up a standing order to transfer cash from your current account to your savings account each month. That way you can save regularly without even having to think about it! If you can commit to saving a set amount each month, you should check out regular savings accounts as they offer some of the best interest rates on the market in exchange for your commitment to deposit money regularly.

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The anti-saver

Money personality – You would like to have savings but hate the idea of having to give up big chunks of cash to put in your savings account.

Savings solution - Why not try one of the new painless ways to save that banks are offering? Several current accounts, for example the 1st Account from First Direct (www.firstdirect.com), now offer a “sweeping” facility, which lets you automatically sweep unspent money (above an amount set by you) into your savings account at the end of every month. Or, even less painless, is the “save the change” scheme from Lloyds TSB (www.lloydstsb.com). Sign up for it and every time you use your Lloyds TSB Visa card, the amount will be rounded up to the nearest pound and the difference will be transferred to your savings account. Alternatively you could start your own change jar, into which you empty your loose change every day or week. With techniques like these, you will hardly even notice you are saving, but the pennies will soon add up to a tidy sum in your savings account!

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The worried saver

Money personality – Having instant access to your cash, in case of an emergency, is very important to you. You don’t like the thought of locking your savings away in a savings account and tend to keep all your cash in your current account (where it is likely to be earning pitiful interest).

Savings solution – These days there are plenty of instant access savings accounts to choose from, which are likely to offer you much better interest rates than your current account, as well as giving you instant access to your cash when you want it. Compare instant access savings account now. If you are worried about your bank collapsing, you should check out our guide to safe savings, to make sure your cash is protected.

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The big spender

Money personality – However much cash you have, you’ll spend it. You always splash out on payday and tend to have cleared your account by the end of the month.

Savings solution – Try to save some money as soon as your salary goes into your account. When you go to check your balance on payday, transfer a set amount to your savings. This means you can be happy knowing that you have done your saving for the month, and if you can’t see the cash in your account, you won’t spend it! Like forgetful savers, you too could benefit from a regular savings account.

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The newly escaped debtor

Money personality – You have finally cleared all your debts and now want to start saving for your future.

Savings solution – First things first, well done! Clearing debts can be a difficult journey and you have successfully reached the end. Now is a great time to start saving, as you are likely to be used to paying out money from your income each month. Why not transfer the same amount (that you used to make in repayments) into your savings account each month. That way, you shouldn’t notice the difference, and if the debts were reasonably big, you will build up an impressive savings pot in no time!

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The younger saver

Money personality – You are under 16 and ready to become a super saver.

Savings solution – It’s fantastic that you are eager to start saving now – the earlier you start the bigger nest egg you can build up for your future. Plus, there are some great deals available exclusively for young savers so look out for special under-16 offers. Most children’s accounts will require an adult to manage the account on your behalf. Once you are 16 you can open a cash ISA, which will usually be your best bet for the greatest returns.

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The older saver

Money personality – You are over 60 and ready to become a super saver.

Savings solution - It’s never too late to start saving so congratulations for deciding to take the plunge! If you are receiving a pension you could try setting aside a set proportion of this each week. There are savings accounts designed specifically for the over 60s but you should always compare the rates with those on standard savings accounts, as they will not necessarily offer the best deal.

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Living the savings dream…

Once you have found the savings style that suits you, you will soon find that saving becomes easy and painless. Setting yourself a target is a great way to motivate yourself, and giving yourself a little treat when you reach your target will certainly sweeten the process.

Whatever type of savings account you choose, be sure to keep an eye on the interest rate you are receiving and if it becomes uncompetitive, don’t be afraid to switch!

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