Saving money is a good habit to get in to and it is something I have always encouraged the kids to do from an early age.
If you save regularly, it is lovely to watch your savings start to add up and keep growing and the easiest way to get your savings working for you is to set things up so that you automatically add a little bit each month to your savings. That way you won’t have to remember to make the payment and you won’t be tempted to skip a month.
When I worked for a large company, my favourite way of saving was the save as you earn scheme (SAYE), where they took an agreed amount from my wages and invested it in company shares. These schemes usually run for three or five years and at the end of the scheme, a tax-free bonus is added to your savings.
It is important to set a savings goal and over the years, my savings have helped to fund home improvements, including a new kitchen, bathroom and windows, a new car and holidays.
Obviously, this option is only available with companies that offer them, so what other saving options are out there, especially with current interest rates being so low?
Cash ISA’s (Individual Savings Account) are savings accounts you NEVER pay tax on. Everyone in the UK aged 16 or over gets an ISA allowance at the start of each tax year, which is currently set at £20,000 for 2018/19.
An investment ISA (also known as a Stocks and Shares ISA) is a tax-efficient wrapper in which you can buy, hold and sell investments.
It may still be called an ISA, but a stocks & shares ISA is very different to a cash ISA, which is simply a savings account you never pay tax on. With a stocks & shares ISA, you’re investing in the stock market. These generally outperform cash savings over the longer term, but their value can rise and fall, so you have to be prepared to take on some risk.
Regular Savings Accounts
Regular Savings Accounts require you to put money away each month with interest paid yearly. Unlike the ISA’s, the terms and conditions may be more rigid, with a minimum monthly payment required and a strict withdrawal limit.
It is important to do your research before deciding on the right account for you and I highly recommend checking out moneyadviceservice.org.uk for more information.
Have you made a new year’s resolution to save?