Maximise your Savings

Whether you’re starting out in your career, bringing up a family, or thinking of future retirement, your savings needs change at each stage of your life.

There is, however, one constant, wherever you are: the need for short, medium and longer term savings.

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Starting your career

Fresh out of university, or in your first job from school, with student loans to pay back, living expenses, and the desire to socialise with friends, saving is unlikely to be a priority.

However, with the average graduate salary £29,000 (according to the Association of Graduate Recruiters) if you get your budget right now, you should be able to build up a nest egg for the future.

• Short term savings

  When wages come in, there is one place for them - your current account. Current accounts are flexible so you can get what you need, when you need it. Get into the habit of checking your account regularly so you know when funds are coming in and when direct debits and payments are going out. The easiest way to save money is to keep enough in your account so you won’t face charges if you get overdrawn.

• Medium term savings

  Thinking about saving for a holiday, a new car, or perhaps for a deposit? You will need to access your money easily, but with a little planning, a notice account or a fixed rate savings account should give a better rate. Set a goal for how much you need to save and when you need to save it by, then budget for how much to put away each month to achieve this.

• Long term savings

  Retirement is the last thing you might be thinking of but thanks to compound interest (the way money earning interest grows the longer you leave it) the earlier you start saving, the less painless the process will be.

Bringing up a family

Late nights used to be easier, but early starts are now probably the norm. When you’re busy bringing up a family or furthering your career, time is increasingly precious.

At this point you may decide to streamline and consolidate investments to make the most of higher rates on larger amounts.

• Short term savings

  This is the era of joint accounts. You need easy access to money for household expenses, and utilities bills, plus a few treats for your family and yourself too. With so many pressures on funds, your current account may empty as soon as your salary arrives. Have a savings account linked to it so you can transfer money back in an emergency.

• Medium term savings

  With more of us being self-employed, it’s increasingly important to have money tucked away for tax demands. Maybe your car needs to be replaced ‘sooner or later’ or you’re thinking about getting new household appliances. Diverting funds into a regular savings account at the start of each month makes obligatory expenses less stressful.

• Long term savings

  Children grow up; nursery fees turn into school or university fees. Or perhaps you’re thinking about moving house, trading up to your dream home. Either way, money has to work hard. Larger prospective gains may involve increased risk so this can be the time to think about taking financial advice to work out the best products for future needs.

Thinking of future retirement

Perhaps the kids have left home. You’re enjoying life, thinking about a ‘once in a lifetime’ holiday, or maybe about taking life a little easier.

This is a good point to take stock of your savings and to work out what you might realistically expect from a pension or other lifelong savings plans.

• Short term savings

  There are still household bills, but you’ve perhaps also got medical expenses, if not for yourself then for pets. If children have returned home waiting to get on the housing ladder you might even find outgoings increase so it’s good to ensure you’ve still got easy-access to funds.

• Medium term savings

  The retirement age gets pushed up and up, but there comes a point when everyone is ready to take life a little easier. Whether you stop working, or start cutting back hours, your income will drop. Now is the time to think about topping up your pension or realising other investment options.

• Long term savings

  Retirement is the last thing you might be thinking of but thanks to compound interest (the way money earning interest grows the longer you leave it) the earlier you start saving, the less painless the process will be.