How to save money

Are you hoping to bulk up your savings, pay off your debts, or are you saving for a special purchase? Whatever your reasons for saving, it is certainly a good habit to get into.

When it comes to how to save, there is no right or wrong answers. Some people save best by putting away a small amount every month. Others save best by setting aside a large amount once a year.

However, these tips are good general starting points to help you maximise your savings...

  • Treat your savings account as a "spare change jar". Most people now have online banking - and if you don't, you should set it up. Check your account balance on a daily basis and transfer any "spare change" into your savings account. So, for example, if your balance is £83.47, transfer the £3.47 into your savings. You can't withdraw it anyway, and you'll be surprised at how quickly these little contributions can add up.
  • Set up a standing order to transfer a monthly amount into your savings account. This should preferably be on the day after pay day - before you get a chance to spend it! Work out a monthly budget to calculate how much you can afford to transfer.
  • Consider investing in a bond or a savings account that won't let you withdraw for a certain period of time. These types of accounts are particularly good if you are saving for something long term, like a house deposit or your children's future.
  • Shop around to make sure you are getting the best deal on interest rates. Some banks are offering interest rates as low as 0.1%, while others (mostly building societies) have rates of 3.2%.
  • If you have a substantial amount of savings, it's worth speaking to a professional financial advisor.

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