Savings accounts / plans are available to everyone, regardless of how much money you have available to save. These types of financial products are important because they give you options if your financial situation changes.
Savings are important because they give you options. You can save in different ways to achieve different goals. The great thing about saving money is that you can do it in a way that suits you and your unique objectives. And, best of all, it does not matter how much money you have: putting some aside will improve your position, however little you can afford.
Saving money allows you to plan for the future of your family with confidence. With a simple plan, you can gradually increase your financial health as well as put a lump sum aside for an emergency as a short-term goal.
A financial emergency means out-of-pocket expenses that take you by surprise! These could include a sudden medical problem, urgent repairs that need doing to your car/home or a travel disaster that leaves you stranded. Having a sum of cash ready for such an emergency makes life less stressful.
Ordinary day-to-day saving includes looking at what you spend as well as what you save. That means budgeting wherever you can (as well as putting money away regularly). Day-to-day saving is important for achieving short-term goals.
But you also have long-term goals to consider. There’s saving for expensive life events such as marriages, retirement, school fees. One way to tackle long-term financial goals is to use your savings to invest. Investing in long-term equity based holdings is a way of saving using financial products and assets. Investing makes your money work harder for you by offering financial returns in the long run.
The best way to start is to decide what you are saving for. What goals are you aiming to achieve? Maybe you want to lay down an emergency fund? Maybe you have longer-term goals, like a marriage to pay for or school fees? Be clear about what you want to achieve and then you will know how much to save. Also you will be motivated with a clear goal in mind.
But don’t get too ambitious too early. You don’t have to rush. Rome was not built in a day. The trick is to get some momentum going and build new good habits gradually. If you set yourself savings targets that are too high, you may become discouraged and give up your plan altogether.
A good practical first step is once you have paid your bills and you know how much money you have left for the week or month put a little aside before you spend that money on general living costs.
Like many millions of successful savers, once you put aside some money for the future on a regular basis you’ll soon get used to budgeting for some savings each month. Your money is your financial future, so give it the attention it deserves, and bingo! You have taken your first step towards a safer financial future for you and your family.
You can develop your savings plan as you go – as well as drawing on support and guidance from your Financial Advisor.
A savings plan can be a general plan of action for you alone or an actual product that you arrange with a bank (which is often called an automatic savings plan).
A plan you put together yourself to achieve set financial goals.
A general plan is a strategy for improving your financial health over the long-term by taking regular steps to budget and put money aside over the short-term. It will include both budgeting and saving steps.
Here are some simple steps that you might see in a sensible general savings plan:
An investment product provided by a retail bank which offers financial interest provided you allow regular pre-arranged withdrawals to be made from your current account to the savings account.
Investing your savings can earn you interest – which makes your money work even harder. To make this easier to achieve, some banks provide automatic savings plans (which are often confusingly called "savings plans").
Investopedia confirms that: "An automatic savings plan is a system in which the plan contributor automatically deposits a fixed amount of funds at specified intervals into their account."
Your Financial Advisor can help you decide whether an automatic savings plan is a good option for your unique financial situation. This type of plan offers the advantage of keeping the money moving regularly. But the disadvantage is that you must have the money in place every month to go out; if you default on payments, you may not receive the financial rewards you have been promised.
Do not save what is left after spending; instead spend what is left after saving
– Warren Buffett
The sooner you start, the better off you will be in the long-run. The great thing about savings plans is that you can start small. Your plan can be as modest as you like. And whether you are saving the odd few pounds a week or larger sums of your salary into investment products, the earlier you start, the more time your money has to grow.
With general savings plans
Remember: the best plan is the one that you are comfortable with. Savings strategies work best with a gentle approach. There’s no point committing to a plan that you cannot stick to. So go easy on yourself!
The best thing you can possibly do for your own savings plan is to speak to a Financial Advisor. When you put your ideas in front of an experienced professional, you’ll be amazed at the common-sense shortcuts that you can implement to improve your financial future.
With automatic savings plans a bank gives you interest
A key thing to bear in mind is how often you want to put money aside – whether weekly, bi-weekly or monthly. Make sure you pick a plan that suits you and your habits, or it will not work for you over the long-term.