Getting the best returns on your Savings Account has never been more important than it is these days. It really pays to know the difference between the accounts and what each is used for, but it’s also worth realising just how important it is to actually have one.
Financial advisors and experts all agree that everyone should open one to have that emergency fund, or even if you are saving for something you know you need to pay for in the future.
With so much uncertainty in the job market and general rising costs it’s more important than ever to have a safety buffer.
It’s been reported that only one in three households does not have anything in the way of any savings and another 19 per cent have less than £1,500. It can certainly be hard when you’re struggling to get by day to day to even consider putting anything aside for savings, but just by putting a few pounds away on payday can soon add up. You can even set up a direct debit to move the funds from your current account into the savings account.
Why Have A Savings Account
If you are made redundant or unable to work for a period of time, you could end up living on credit if you don’t have a decent amount put away in savings, experts say you should have the equivalent of at least 3 months’ salary saved.
We always seem to have unexpected and unplanned expenses, we probably all know of someone who’s car has recently needed money spending on it, this again would need to be borrowed money if you don’t have an emergency fund.
It doesn’t always have to be for an emergency, however; many people like to save for university costs, Christmas funds or even for the rising deposits needed to buy or to move home.
A savings account is probably the best thing you can have for these situations, the type of account you choose is up to you. If you think you can save for something long term like university costs or to help your child buy their first car then you can look at accounts like ISAs that have bonus rates if you leave the money in.
If you are saving for the inevitable emergency costs then you will probably need an ‘Easy Access Savings Account’ so you can reach your money as and when you need it, and will gain you a little interest too.
Shop Around
You really do need to shop around these days and continue to do so. It’s now not so simple as to head down to the local Bank or Building Society and open an account. Decide what type of account is best for you by searching on a comparison website like www.moneysupermarket.com and then take advantage of the introductory offers they have. Most of the rates include the bonus so look to move your money when the bonus period is up.
Budgeting
One of the great things about having your money in a savings account is that you will be less tempted to use the money on un-necessary items and more likely to enjoy seeing your balance rise. The simple task of transferring the money across to your current account is usually enough to put you off that purchase that you probably wouldn’t have thought twice about if the money was in your current account.
Providing you have your money saved with a reputable lender and they are regulated by the Financial Services Authority, then your deposits are covered by the FSCS (Financial Services Compensation Scheme). This means that your savings are covered for currently up to £85,000 per person and per banking group.
