Savings Made Simple
This week is Savings week. UK Savings Week was launched in September 2022 by the Building Societies Association (BSA).
This year, the focus is encouraging savings habits. The aim is to make saving simple and rewarding. Something we’re really passionate about.
Savings as a concept is simple, but there are many options to consider. We’ll explain the basics below and include some top things to consider when looking for a savings account.
Different types of Savings accounts
There are different types of savings accounts available, all offering different features. The one that’s best for you will depend on your savings goals.
We’d think that, if possible, everyone should have an ‘emergency fund’. The best place to keep this is in an easy access account. With an easy access account you can withdraw your money whenever you need it and pay in any time too. You’ll still earn interest on your savings too.
These types of accounts have restrictions on when you can access your money with the reward of a higher interest rate. These include limited withdrawal accounts, notice accounts and fixed products. It’s a good idea to check the key features of these products carefully, as access and terms differ by provider.
For those wanting to build up a regular savings habit a regular saver could be for you. These accounts are designed to save a small amount every month and help to build the savings habit.
Individual Savings Accounts, or ISAs, are savings account where you don’t pay tax on your savings. Cash ISAs can work for all savers but the Government sets limits on how much you can save tax-free each year (£20,000 for the current tax year 2023/4) .
Personal Savings Allowance
As well as the type of account, it’s worth remembering the benefit of the Personal Savings Allowance. Separate from any money held in a Cash ISA, the Personal Savings Allowance is the annual amount of interest you can earn tax free on non-ISA savings. This is currently £1,000 for basic tax payers and £500 for higher tax payers. Be aware of the interest rates your savings are earning and how much you have in savings overall.
Where to start
- We’d recommend having a mix of savings accounts for different goals. If you only have a small amount of savings look at a regular saver or an easy access cash ISA.
- Setting a savings goal is a great way to stay motivated.
Starting small is fine and don’t worry if you don’t keep up the habit at first.
Just start again and over time seeing your savings grow can help keep you motivated towards reaching your goal.
Published: 22 September 2023
Author: Pauline Crawford