At some point, you may have decided that it is too late for you to start saving. Maybe your finances are a mess, or you don’t think it is worth your while. We would like to present some reasons why you should still think about throwing some money into a savings account every month.
Having an emergency fund
If there is one savings pot that you should try and build up, it is the emergency fund. If you have an emergency fund to fall back on, you do not have to rely on loans or credit cards to fund the emergency and cover unexpected expenses.
The amount you should have in the fund will vary but it should be enough to cover a sudden expense. A few hundred pounds (around £500) should be enough to cover most major expenses and have some money left over. If you think that you could need more than that, around £5,000 is a decent amount that should cover most major incidents.
Big purchases fund
If you have a big purchase that you want to make then you need to get saving for it. A big purchase can be anything from a new car to a deposit for a house. Although it might be tempting to put all your big-ticket ideas onto a credit card or a loan, it might be a better idea to save for them.
Or save part of the money to go down as a deposit. At the very least, being able to put down a bigger deposit can help you negotiate better terms for the rest of the amount. This type of account should have a goal limit attached to it to keep you focused.
We are not doing much travelling at the moment, but when we are able to, wouldn’t it be great to have the money to slap down for a holiday? With a holiday fund, this is possible.
For this type of saving, you can put money into a regular saver account. With these accounts, you put a small amount in them and the money is locked away for a year. After the year, the money is released and you can earn a higher rate of interest than the average instant access account.
Wealth building fund
If you are interested in building long term wealth, you will need to set up a savings account for long term wealth building. The idea behind wealth building is that you have multiple streams of income available to you, and savings is one of those streams.
For this account, there is no amount that is not suitable to be in it. You are merely limited by the amount that a savings account can hold, and this is normally £9 million per account.
When it comes to wealth building, you might want to look into your options for stocks and shares, and speak to experts such as Monty Cerf too. However, an ISA account is always a good option because you can take advantage of the tax-free interest.