What are the Best Ways to Save Your Money?

In life, you never know what could be just around the corner. That’s why it’s important to make sure you have money set aside for emergencies should an unexpected event arise.  

There are many ways you could choose to save your money for a rainy day which will give you financial security and the freedom to make a purchase or expenditure should you need to.  

This article will highlight some of the ways you can save or invest your money, the benefits of having savings and why it’s so important to help you plan for the future. 

Budgeting 

Learning how to budget and setting yourself financial goals is a great way to help you calculate how much you could set aside each month from your wages and put into savings.  

Take the time to identify all of your monthly outgoings and how much you need to cover things such as utility bills, your rent or mortgage and any other necessities such as groceries, transportation costs and things like subscriptions.  

Having a clear picture of your financial situation will allow you to gauge how much you can comfortably set aside each month without getting yourself in debt or putting your other financial responsibilities at risk.  

Savings accounts 

One of the best ways to save is by opening a savings account, and there are many different types of savings accounts to choose from. 

Many banks can offer easy-access savings accounts where you can earn interest tax-free, and you can deposit and withdraw money whenever you need to. You won’t necessarily see a great return on the money you have deposited, but having access to it whenever you want has its benefits. 

You could also opt for a fixed-term savings account, where you will see a greater return on your investment, but your savings are locked away for a pre-determined set of time. 

ISAs  

ISAs, or Individual Savings Accounts, allow you to deposit money that you can earn tax-free interest on. There are five different types of ISA: 

• Cash ISA 
• Stocks and shares ISA 
• Innovative finance ISA 
• Lifetime ISA 
• Junior ISA 

Each of the above comes with its benefits and restrictions, so depending on what you are looking for will determine which ISA could be the best option for you.  

The maximum amount you can save in an ISA per year is £20,000. This money must be invested by the end of the tax year to count towards this year’s allowance.  

Investments 

Choosing to invest your money instead of putting it into a savings account is a good way to help avoid inflation and potentially make a good return.  

Investing your money is not without risk, but it is a common practice, and many people choose to invest their savings for the chance of making a return through dividends.  

You could choose to use index trading to invest in steady stock indexes which pose a lower risk. The decision to invest your savings into stocks and shares should be determined by your short or long-term financial goals, so bear that in mind before deciding to invest.