What savings should you go for?
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Emergency fund |
Short term savings (1-10 years) |
Longer term savings (10 years+) |
Pensions |
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This is a fund for - well - emergencies! You need to ensure your money isn’t locked away - access is the main thing to keep in mind, not the interest rates. Savings interest is tax-free up to £1,000 for basic rate and £500 for higher rate taxpayers each tax year. If your savings are so large that they generate higher amounts of interest than that a cash ISA is tax free (you can put up to £20,000 in a cash ISA each tax year). |
Look into fixed term cash savings accounts, where you get your money back with the interest after a set amount of time. If you’re sure that you won’t need the cash for that time, it might be a good choice for you - just keep in mind that your provider might penalise you for early withdrawal if you need to take your money out before the term ends. National Savings Premium Bonds offer a low risk way to participate in a monthly prize draw with the remote chance of winning £1M. |
Depending on how much risk you’re willing to take, higher stock market based investments offer the potential of making returns that are much higher than cash but those returns have a wide range of possible outcomes and the value fluctuates widely from day to day. Be wary of chasing the latest investing fads or massively hyped new opportunities like cryptocurrency. Investing should be a decision made with the long term in mind; just remember that all investments can go up or down in value, so it’s important to understand what you’re getting into and to take independent advice if you need help choosing. |
Make sure you’re on track for a comfortable retirement: gather all your pension statements (you should get them annually). If you have multiple pensions, it might make sense to put them into one pot. Take a look at this pensions calculator to think about how much you need to save. |
Now that you’ve thought about your goals, here are some top tips to start saving:
You need a system for saving, not willpower
To set yourself up to save for the long-term you need to allow yourself to have some fun, too! Make it easy to save by deciding where you want your money to go before you get paid. Take a look at our smart spending system and set out a plan for how you will spend your money, including regular saving.
When starting to save, the number you’re working towards can feel big and scary, so always focus on the smallest number. For example, if your goal is to save £3,000 and you’ve already saved £500, think about how you’ve saved £500 - not that you have £2,500 to go. When you’ve saved £1,600, you can start to think ‘wow, I only need to save another £1,400’. By tricking your brain to focus on the right numbers, you stay motivated and feel good about your savings milestones.
Automate it
The best way to save consistently is to make it super easy and require minimal effort. If you spend a little bit of time setting up your spending plan now, chances are you won’t think about changing it afterwards for a while.
- If you don't have a separate savings account, open one.
- Then set up a standing order, which will regularly transfer money from your current account into your savings account. The best time is straight after you've been paid - that money will get safely stashed away before you've been able to think about spending it.
- Click here to check if you have access to a Salary Finance savings account with contributions straight from your salary, making it completely hassle-free!
Remove the temptations
We're all human - and it's hard to constantly say no. So just make it easier for yourself by reducing the amount of times you have to say 'no', even if it's subconscious. Turn off any shopping alerts and unsubscribe from retailers' email lists. Delete shopping apps from your phone and delete your credit card details from auto-filling on your apps and browsers. If you take the time to put up barriers and curb your spending, you’ll find you have more to save and make some lifelong habits that will see you through.
Negotiating: learning the basics
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