It’s Time to Start Saving
A look at why and how small businesses can manage cashflow and set aside money for the future
For many of us, times are a little tough. Our finances are in the spotlight more than ever before with a number of people in the UK struggling to save. In fact, on average just under a quarter of people in the UK aren’t saving anything at all, while on average those who are only manage to put away £87 per month.
But when times are tough it’s exactly when you should be putting something aside each month to save for your future. Whether you’re a first time buyer, looking to make the next move on the property ladder or even saving for a wedding you need a plan in place.
So, you know you need to start saving, but where do you begin? Here’s a quick guide on putting something in place from ISA tax benefits to easy access saving.
How much can you part with each month? For many of us the final week before pay day is always a struggle, so doing without a portion of your savings doesn’t always seem that appealing. Start off by making a monthly budget and see how much you can actually afford to save. Once you have this number set up a direct debit into your savings account, as this way you won’t have to rely on yourself to move it each month, it will be automatic.
The first place to start is with an ISA. ISAs have specific tax benefits in place to encourage saving, so it would be foolish not to use them.
If you’re just starting your savings plan it’s advisable to opt for a cash ISA, as this enables you to save £5,640 this current tax year, tax free. The best way to view an ISA is as a tax free savings wrapper, where inside your savings are sheltered from the taxman. Once you remove them from the wrapper, you lose this tax free status. Once you open a cash ISA, make sure you keep your savings within the wrapper.
If you feel like you want to save, but know you’ll probably need access to them at short notice to cover various extra expenses, you may want to open an easy access savings account. With this option you can deposit funds as and when you have them and you won’t pay any penalties or charges when you access them. You won’t, however, get the higher rates of interest you would with a fixed rate savings account for example, but it’s a good place to start.
For more on savings read our article on Individual Savings Accounts (ISAs).