Savings Guide for UK Savings Week 2023 - Part 2
Before jumping straight in, previously I talked about pulling apart some sections of savings so that you can understand what the most suitable products are for you.
Everyone is different and has their own wants, needs and motivations for savings, so it’s important to understand this before you lock your money away in a 5-year bond, but might want to re-do the kitchen next June or have a family trip to Florida at any point.
Some questions to ask yourself before looking at savings products could be:
- Will you require access to your money at any point in the near future?
- Do you want a fixed rate that doesn’t change or are you happy to accept a variable rate that could go up or down at any point?
- Do you have a lump sum to invest or are you looking to save little and often?
- Do you have any other savings accounts and are there any tax implications/benefits on the interest that you are earning?
- Have you had a Cash ISA this tax year?
Fixed or Variable?
Agreeing to a rate is always dependent on your attitude to risk and can come down to whether you will need access to your money or not.
Fixed rate products mean that the interest that you earn on the amount you invest will never change for the set period of time. There is no right or wrong here – it is a personal decision based on your attitude to risk.
Variable rates can go up or down. Usually, rates are increased quicker than they are decreased, if rates are due to decrease your bank or building society will always let you know in advance, however if they are increased, they may not let you know. If you are thinking of taking your funds out of your savings account to move it elsewhere, it is always good to double check the rate before you do! It could save you some time-consuming life admin in the short term.
Lump sum or little and often?
Most fixed rate products require a minimum amount to open the account to get the fixed rate that is on offer. It can be good practice, if you do have a lump sum to invest, to look at your taxable allowances on www.hmrc.gov.uk to ensure you are managing your money effectively as there can be limits on the amounts that you invest in different places.
Regular Savers accounts are typically a good rate of interest, either fixed or variable, but there is a limit on how much you are allowed to save each month. There is no standard set Add on whether they allow you access to your money or not – however we have seen providers in the market move to allowing access to these kinds of products, as that is where our needs as consumers have changed.
Regular Savers are a great place to start if you are looking to change your habits and try to save for that rainy day, holiday, birthday or just a huge shopping trip!
Future you will thank you for it!
Saving can be done however it works for you, TikTok has been a great platform for whatever you want to spend hours watching, mine sadly has been savings hacks. One idea is where you start saving 1p, and double the amount you save each day, the following day its 2p, then 4p, then 8p, then 16p and I could go on and on, but you get the picture.
Some people choose to sacrifice their favourite barista constructed coffee each morning and save that £3-£6 (no judgement on what you spend on your coffee, it’s an essential item to function).
I hope this small snippet has been somewhat helpful, more to come soon!
If you missed them, you can read the other articles here:
