A guide to making savings

Whatever you are saving for, be it a mortgage deposit, a holiday or even your wedding, it doesn’t have to be difficult to set a little extra aside each month. Be thrifty and frugal, and as my nanna would often say “Look after the Pennies and the Pounds will look after themselves!”

There is one area to cover before we delve in, and that is if you have any credit cards or outstanding loans, these must be paid off before you consider putting money into a savings account. The only exceptions to this are Mortgages and Student Loans, but in all other cases the interest charges on your debt will always outweigh the interest earned on your savings.

The first step for any saver should involve working through your bank statements to get an idea of your household’s total monthly income, and then compare this figure against your total monthly outgoings. You may need to think about this carefully, and again by having the past couple of month’s bank statements to hand this will prove to be a much easier task. Look out for things the obvious things like utility bills and rent/mortgage payments, and things you may not give much thought such as Insurance policies and breakdown cover or mobile phone contracts and subscriptions like your TV license & gym membership. Crossing items off your bank statements as you go will help reveal hidden expenditure.

If you have a target of how much you need to save, then it should be easy to identify what needs to go. Sky TV, fully fledged mobile phone contracts and gym membership are all luxury items. For example, these could be replaced with Freesat, a basic phone contract or pay as you go mobile and jogging/cycling instead of the gym. Cycling could also replace your daily commute whilst has multiple benefits. You’ll save on fuel and vehicle maintenance, and you’ll be freeing up more spare time as you’ll be getting your workout during the commute.

Finally, make sure you are receiving all of the benefits and tax credits you are entitled to. The government readily takes cash straight out of your pay packet, so do everything you can to get some of it back! Perhaps the most important note in this article is that you ensure you are taking advantage of the annual £3600 ISA allowance before you go looking for a standard savings account. With an ISA at the same interest rate, a basic rate taxpayer will earn 25% more interest, whilst a higher rate taxpayer earns 66% more! With interest rates being at an all time low this really is a must.

You should always compare savings accounts to ensure you are getting the most from your hard earned savings, and be sure to check your eligibility for an ISA

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