Whether you are saving for a new car, buying your first home, or just saving for retirement, there are many different ways to start saving money for your future. So, here is a guide to responsible saving to get you started.
Without a budget plan, it is easy to overspend each month. So, the first thing to do is create a budget. Work out your income each month and calculate your expenses such as bills, rent, and travel expenses. After the necessary expenses are out of the way, you can work out your remaining budget and determine an amount for your personal expenses, e.g. entertainment or for treating yourself or a loved one. With that out of the way, the rest can be put in a savings pot or savings account.
Pay Off Debt
The best thing to do is avoid debt entirely so that you’re not paying off interest rates each month as well as repaying the debt. Try to keep within your credit card limits and use savings if an emergency occurs. However, if debt has already been built up previously, ensure your payments are paid back on time to avoid higher interest rates or missed payments that could damage your credit score. It’s important, therefore, that you pay off your debts before you start saving. If you have multiple debts from different lenders, you can consolidate debt by talking to a financial advisor and get debt advice and a debt management plan in place. You could find that consolidating multiple high-interest payments with a debt consolidation loan is much easier to handle, and it can help you save on interest rates.
Consider ISA Accounts
There are multiple options for ISA accounts, which can be confusing. ISA stands for Individual Saving Account, which is a savings account that provides flexible investment options that are tax-free for up to £20,000. This means you don’t pay any income or capital gains tax on any income or capital gains tax on any income or growth generated by your savings.. ISAs can be flexible, which means that you can essentially withdraw savings at any time in case you have an emergency, and as long as you pay back that amount during the same tax year, it will not affect your annual investment allowance. If you are interested in a stocks and shares ISA account, then try to find a provider that can talk you through all the ISA options, such as Willis Owen. Willis Owen offers a range of ISA options that you can access online. Find more information here.
Another way to make building funds easier is to find ways to save money automatically before you even see it. There are many banks that allow you to manage your accounts digitally through online banking or a mobile app. These sites and apps allow you to set up automatic transfers between accounts so you don’t have to remember to do it manually. Some banking companies even have the option to round up your spends and put the extra change into a separate space or pot so that you have a backup sum when you need it, or if you’re saving for a specific goal.
There are countless ways to save up money and there is help and advice everywhere online. The first step is to sit down and draw out your plan – the sooner you start, the easier it will get.