There’s little doubt that having savings set aside to cover a rainy day is a good idea. It’s also no secret that saving on a regular basis is a good way to build up a tidy sum.
But while we may like the idea of saving, many of us find it hard to actually do.
Why it’s important to save
It’s important to have savings to help you deal with the unexpected. As financial planners we recommend having enough savings to last for three months if you lost your main source of income.
As well as building up an emergency fund, saving can help you pay for big bills and for things you wouldn’t otherwise be able to afford out of your everyday money such as holidays or the deposit on a new home.
And when it comes to saving for the long-term such as retirement, regular saving is often the only way to build up the amount of savings you might want or need.
Tips on how to get into the savings habit
Save on a regular basis. Set up a monthly direct debit so that money is taken from your current account and put into a savings account. If you do this straight after you get paid you won’t have time to think about it and will quickly get used to budgeting on the money left.
Save a regular amount each month regardless of your goals. Keep saving even if you don’t have a particular goal at the time so that you don’t lose the habit.
Keep savings separate from your everyday money. This way there’s less temptation to dip into them. Bank accounts should usually be your first port of call as any interest you earn in these savings accounts is tax-free.
Regular investment accounts are another good option as they are an easy way to invest as well as providing the discipline to do so.
Consider having more than one savings account. If you are saving for several things it can be handy to have several savings accounts. For example, you could have an account for emergency money, a separate account for Christmas savings and another account for general savings (if you save a set amount each month this could be where any money you have left after saving for specific goals goes).