Flights and hotels may be reducing in price, but for those that haven’t done adequate planning, it could be another year at home in not-so-sunny England rather than a trip abroad to foreign climes.
So how can you boost your savings prowess to make sure that you’ll get that little bit of essential R&R next year?
An impossible dream
Saving money for some people seems like an insurmountable task, but small steps can make a big difference. It is a well-known fact that Britons are pessimistic about future savings with only 27 per cent of men saving for a long-term goal (such as an emergency fund).
But it doesn’t all have to be doom and gloom. Whilst it may be too late for this year’s beach break, there’s time aplenty to start planning to make next year a little more exotic. So where do you begin?
Tip one: name your goal
It has been proven that people who have something in mind to save for manage to put away around £550 more than people who don’t year-on-year. Even if you are just saving for a rainy day, if you name your goal you will be more inclined to save.
A good tip if you’re new to saving or not confident in your willpower is to start with a small goal. This will just give your momentum a little boost before you progress to saving a larger amount.
In fact, giving your savings account an inspiring name can sometimes make you more inclined to save. Research shows that naming their account after its purpose, such as ‘California 2015’ or ‘wedding fund’, can spur savers on, increasing the chances of being able to achieve their goals.
Tip two: Work out how much to save each month
Working out how much to save each month depends on three things; the amount you want to save, how much cash you have spare at the end of each month and how soon you want to reach your goal. The amount that you can sustainably expect to put into a savings account each month is a balance between what you are able to afford and how long you want to save for.
Tip three: Set up a regular payment
Opening a straightforward easy access savings account can be done fairly quickly and easily if you choose to do so with your current bank. However it’s always worth using comparison tables to see whether there are better accounts available elsewhere - and we’ll talk more about this later.
Once you have a dedicated account for your savings fund, it’s possible to put in place a direct debit or standing order from your current account, where money is automatically transferred each month. The amount you transfer and date it leaves your current account is down to you, and many people find that arranging this for pay day means that they don’t even miss the money because they effectively never see it in their account.
Tip four: Shop around to find the best place for your savings
When you have started to save you can give your pot the chance to grow faster by dedicating some time to finding the right account. The best home for your savings depends on how much time you have to reach your goal and how much of a risk you are willing to take.
It is important that you understand the different types of account and how these can affect your funds. For a short-term goal like 12 months, for example, you may find that a savings account or Cash ISA with a high rate of interest but zero access is the most lucrative course of action. Alternatively, with a longer term goal where you don’t necessarily want to tie your money up for a long period of time, an easy-access, lower interest account might be a better fit.
Although thinking about saving can be daunting initially, it can be made simple when you understand what is best for your money and keep a goal in mind. That’s why it is crucial that you work out how much you can invest each month, and the best type of account in which to keep your savings.
To find out more about the savings accounts on offer at Aldermore, don’t hesitate to get in touch with our expert savings team.
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