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Author: Internal Customer Services Agent
Saving money for later in life
I will never ever be able to stress enough at just how important saving money on a monthly basis is. People are always likely to need money from time to time as no one can honestly know what the future holds. People can find themselves in a financial situation where they need to have money and in some cases could do with it quickly. Whether someone is looking to make that one off significant purchase, which could include a new car or money towards a new house, or just need a small amount of money as they have a short term cash flow situation and an unexpected bill has suddenly arrived. Having money saved for the unexpected is always advisable as it limits the need to borrow money. Borrowing money will mean, in most cases, that you must not only repay what you borrow, but also interest too. Unfortunately however the ability to use savings is not always available to everyone.
A question for most people thinking of starting to save will be how much do I save each month? This can have many different answers and according to recent articles I have read regarding this matter there is no correct answer. Some people clearly have the financial means to save more than others and some people also have better financial will power to be able to manage their money better and to put that money aside for future needs. Other people’s primary objective may be to try to save as much money as possible for their retirement or to make sure that they can leave their family a lump sum when they do not require it anymore.
Take someone who is on a reasonably good monthly wage, has limited outgoings and still lives at home for example. It will almost certainly be the case that they can save more than someone who has a small regular work salary and have a family to financial support. In the same way someone who is in full time employment will most likely be able to save more money than someone who was recently made redundant and is now only in receipt of benefits such as tax credits or JSA (job seekers allowance). Whatever the financial situation, saving something on a regular basis whether it be just a few pounds weekly, fortnightly or on a monthly basis will always one hundred percent be better than saving nothing at all.
There are a high number of people, myself included, that despite putting money aside will then spend it. Many of us, again I am included in this, will have a savings account that we try to transfer money into and then use that account to try and build up to a meaningful savings balance. There can however be instances when people will then use that money as they short of funds in their current account rather than borrow money. This can be sensible for cash emergency such as unexpected bills as this will not incur interest, however using savings just for a night out with friends or for some new clothes that are not really needed is not really advisable. That is when willpower again comes into play. Many have the strong intention and belief that when they use money from savings they will replace it again, however some of us don’t do this and over a short space of time the savings balance diminishes quickly to nothing.
I was reading an article from Forbes Business that was linked from the Daily Mail. It agreed with my earlier statement how much people can save in a set period varies greatly depending on both how much disposable income they have and also their attitude to spending or saving. It also agreed that of some people will physically be able to save more than others. It stated a good bench market to work towards would be the 10% of your salary rule. This means that 10% of your monthly take home salary should be put into savings. Other advisors will work more on the size of the savings pot you should build, rather than, or as well as, how much to put in each month. Is suggested that for many people the target savings pot should be at least 3 months’ salary. This is on the basis that if you were made redundant or lost your job, this is how long it could take to regain a stable income. Of course the more you save above this the more financially stable you are.
If they have not already done so people should look to open a savings account and start to put money aside for their future. I would advise people to cancel or cut up the debit card for that account to stop it being used impulsively. It can be far too easy if people have the card in their wallet to dip into this savings balance and withdraw cash whenever they want to. If they have to first go on-line or use telephone banking to make the transfer to their current account this can be just the delay they need to make them think about what they are doing.
So as we can see, while the amount of disposable income is a controlling factor to how much can be put into savings each month, this can be further limited by the will power of the saver in regards to their attitude to spending or saving. Some people will naturally let any money they have ‘burn a hole in their pocket’ and while this can never be stopped if the person is unwilling to do so, making the money slightly harder to get access to may just help.