Savings

You may wish to save for a specific purpose, for example a deposit on a property, in this case you will have a rough time scale of when you will need the funds and how much. By saving a regular amount your funds can quickly build up. 



If there is no specific purpose in mind, firstly you should save some money for a rainy day, building up a fund in cash which you can access, but only doing so should you really need the funds to pay for an emergency. Give yourself a target of how much this should be, many people target themselves with six month's income as a rainy day fund. Once this has been achieved you could consider making a monthly investment for your longer term needs. The key to savings is discipline, often a standing order can help you to achieve this, the savings will then form part of your monthly outgoings.



Important Note:   Before you start saving you should consider paying off any debts, especially if the interest rate for the borrowing is high.  



In terms of cash investments, such as money you hold in the building society, currently the first £1,000 of interest is tax free for basic rate taxpayers, if you are a higher rate taxpayer this is reduced to £500. A cash ISA would ensure all of the interest is tax-free but it is wise to compare the rates to the normal savings accounts available, especially if your overall interest is below the limits noted above.   



One advantage of saving in a cash ISA is that you would be able to transfer this to a stocks and shares ISA at a later stage without affecting your future ISA allowances. This may be suitable if you are happy to take a higher risk in the future giving the potential for a higher rate of long term growth.



If you are between the age of 18 and 40 and you wish to buy your first property or save for retirement, you could take advantage of a Lifetime ISA.  Please click on the following link for full information on how a Lifetime ISA works: https://www.gov.uk/lifetime-isa    

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