There’s more to savings than simply putting money away in the bank. If you want to make the most from your money, than you need to adopt various practices and this guide can help you with this.
Whilst it may seem fairly self-explanatory, there are actually many reasons why you should save as much money as possible. Not only can saved funds give you the freedom to make purchases as and when necessary but it can also safeguard your future. This means that, should situations arise which require an input of cash, you will have the means to do so.
Where to save?
Of course, once you have decided to save your money you must decide where to do this. Savings accounts are the most obvious choice but, with numerous types of account available, choosing the best once can be difficult.
First of all, a savings account is all about interest. Ideally, you want to use the various high interest savings accounts available to get the largest returns.
With so many different options available to savers, it is important that you shop around for the best interest deals. Make sure you consider the interest rates as well as any other rewards which are given to savers. Some accounts may offer a high interest rates whilst others will credit you a set amount if you deposit a regular amount each month, so it is important that you consider which is the best option for your situation.
The next question on your mind should be how much you can save. Ideally, you should save the excess income that you don’t need; this is your net income after subtracting all bills and forms of expenditure. If you wish to save more money, then try budgeting or seeking additional income to increase the amount of money you have left over each month.
How much you should save is up to you but you should always try to save as much as possible. Make sure that you don’t sacrifice basic amenities or comforts to accommodate this, however, and only save an amount you can afford to.
It cannot be stressed how important regular payments are to any savings plan. Making regular payments makes it much easier to keep track of finances and work out how much interest you will make.
Furthermore, don’t be afraid to increase the amount you pay into your account. If you receive a raise, for example, consider saving some of this extra income instead of spending it: after all, it always helps to have more money put away.
Keep track of inflation
Finally, you should always keep track of inflation as its effects on the economy trickles down into every aspect of personal finances, including savings accounts. For example, not every account offers a fixed interest rate and this means you could find your interest rate changes in relation to inflation. These changes could have a significant impact on your finances as a low interest rate will be beneficial for those obtaining loans and credit agreements but detrimental to those with savings whilst the opposite is true for high interest rates.
Understanding how inflation and changes to these rates will affect your savings accounts is the easiest way to manage your finances more efficiently.