These days, most people are more money-conscious than ever before. What with the economic downturn and the slow (far from steady) recovery, there are many of us who think carefully about every single purchase that we make. This helps to take stress off the current account, easing monthly expenditure and – hopefully – meaning there are a good few coins still left in the bank at the end of every month.
But what to do with the money we save? We take a look at some of the options for growing your savings to the max.
Where to save and invest
Putting your money into a savings account is a time-honoured, safe, and very popular way to save. The benefits are that you are saving in a way that avoids risk. However, there’s a downside to savings accounts in that they don’t pay much in the way of interest these days. If you look at the historical interest rate charts for savings, then prepare to be amazed – and perhaps even slightly saddened – at just how much an everyday savings account used to pay in interest. From a consumer perspective, there doesn’t seem to be an awful lot to choose from in terms of interest rates today – most are around the same level.
On the plus side, savings accounts are very safe. A lot safer than putting your money inside the mattress, anyway – since in most cases your deposits should be protected up to a certain amount. The downside of course is the low interest. But that doesn’t mean there’s no place for this type of saving – it’s just that if it doesn’t grow with inflation, then you money doesn’t retain all of its value in real terms. This may only be a small percentage – but there’s something slightly painful about the idea of a deposit being worth slightly less as time passes. Which is why many people explore different options.
So where do you go when you want to make more from your money? Other options for your cash include peer-to-peer lending, which cuts out the middle man and allows people borrow money from (and lend to) each other via the internet. With bigger yields than ordinary savings accounts, this is a good option for those who know the possible risks – for instance the fact that your investment won’t have the same levels of protection that it would have at a bank, among others.
These days, one of the only ways to really get your money working for you is to invest. However, this can involve quite a lot of research if you choose to be a DIY investor, since there’s a lot more to it than just putting your money in. There are lots of places to get investment advice – and not all the options mean that you need to be an expert – for instance, tracker funds just follow an index (although not always exactly) and hopefully, over time, increase in value.
Cost savings for cash savings
Once you have your savings options sorted, you’ll want to maximise the amount you invest,
There are countless ways to do this, so what follows are just a few suggestions to provide you with some inspiration:
Cut your debts. Put efforts in to paying down debt before you start saving. Look at strategies for debt reduction – the stack method for instance allows you to focus on priorities such as interest rate to help you cut debt.
Lowering your utility bills. The obvious step here is to try to lose less fuel – and there is a ton of good advice on this, with whole websites devoted to the subject. You can also of course shop around for the best value provider.
Watch out for unforeseen expenses. This is one area where savings can often help. If you were to fall ill then your earnings could be affected – according to recent research, 33% of people who are diagnosed with cancer either have to stop working, whether it’s for a period of time during treatment, or permanently. And according to the ABI, the average payout for critical illness claims in the UK is £60,400 in the UK (91,900 USD). So getting the right cover – whether that is for home or health – is a worthy consideration.
Putting it all together
Cutting expenditure leads to money saved. Money saved (or prudently invested) leads to more money – and by actively seeking out the best ways to cut expenditure as well as save money, hopefully you will find yourself moving in the right direction financially.