We are told that having savings is a good idea, but simply putting money into a savings account and it just sitting there doing nothing isn’t the best way to ensure that you have enough money to make your life easier. If you are going to save, it’s important to make those savings work for you and increase if possible. Here are some ways to get more out than you put in, wherever possible.
The Right Savings Account
There is no such thing as a standard, generic savings account. Each one will have different factors associated with it, and it’s essential that you do your own research to find the best savings account for you. The interest rate is something that is important to make a note of – the higher the interest rate, the more money you will make from your savings account.
However, some of the accounts with the highest rates also have fees on them, so it may be worth choosing one with a lower interest rate and no fees, for example. Others may offer easy access to your money, whereas another account may lock that cash in for a certain number of months. Compare as many as you can until you find something that works for you.
Another excellent way to earn money from your savings is to invest them rather than keep them in a separate account to earn interest. Investing in the right markets will mean that you make more money this way, although it should be noted that you can also easily lose money in trading if you are not sure of what you are doing (and sometimes, even if you are sure, the markets can crash unexpectedly). This is why it is important to find a good broker so that you have someone to ask for advice from and who can help you make the right financial choices.
Remember that investing is not a ‘get rich quick scheme’ but requires patience to make a good profit, and it’s certainly not for everyone, so do your research before you even think about making a start.
Pay Off Your Debts
If you have debts, then using the money you are putting to one side in a savings account or similar to pay them off is a great idea. Although you will be using all of your savings, you will have more disposable cash each month when the debts are gone, and that means that eventually, you will be able to put even more into your savings account. It will also reduce any stress you may be feeling with regards to your finances, potentially meaning you can avoid needing bankruptcy solicitors, and that’s good for your health.
It’s important to be fully aware of all of your outgoings, so make a list of everything you spend each month on debt. Break this figure down into the separate cards, loans, and other debt you have and figure out which has the highest interest. This is what you should aim to pay off first, as you will save money over time.
Learn To Budget
A budget is an essential tool for improving your financial habits, and when you can budget correctly, you will really be able to make your money work for you in the right way, not just in the present but ultimately for the rest of your life.
When you budget, you know where your money is coming from and are deliberate about where you spend it. Rather than spending without a strategy, you are making your money do what you want it to do, and getting you where (and what) you want.
Budgeting’s purpose is to constantly spend less than you earn. When you make a budget, you allocate each pound earned to a spending area. A budget can therefore be used to:
- Spend less money
- Know where your money is going
- Determine your negative financial behaviours
- Pay off your debts
- Avoid incurring additional debt
- Spend your money on things that are essential to you first
- Put money aside for the future
Budgeting isn’t a one-time event. It should be something you do on a daily basis. To account for major costs or your personal spending patterns, you may need to change your budget from month to month.
You can pick where to invest your money after you know how much you have. You have control over your money when you are selective about where you spend it. This is the first step in making it work the way you want it to instead of feeling trapped by your money.