When we decide to save money it is often a hard challenge. We might have to work really hard to spend less on other things or to earn more money so that we can have enough spare money to save. However, we often put our precious money into accounts that earn very little interest. This means that it does not gain very much and often the amount the savings increase in value is lower than inflation so the real value of the money decreases. There are ways to improve this situation though.
It is wise to compare the savings rates between different banks. You will find that they can vary quite a bit and this means that you could possibly get a better savings rate by just swapping to a different bank. The rates will change though and you will find that if you research again, perhaps in a years’ time, then it could be different banks that offer the best rates. This happens because they all want to try to be competitive and will keep changing their rates to try to attract in new customers. It may mean that you will need to swap your money about quite regularly to keep the best rate, but that should not ne too difficult to do.
Tie money up
There are accounts which attract higher rates of interest because they tie your money up. This means that you cannot get the money form the account immediately. It could be that you have to give a certain amount of days’ notice before you can withdraw the money or that you have to keep it in an account for a year or number of years. These have advantage sin that the interest rate is higher but you cannot spend the money. Most will allow you to make withdrawals quickly, but you will lose out on interest or may even have to pay out money in order to do so. They are therefore much more suited for money that you are not keeping to use for an emergency. If you are saving up for the future then they can be good and not being able to easily access the money could actually be an advantage as you will not be able to spend the money that you are saving up.
Pay off loans
It could be better to not save money at all. If you have any loans, you will find that the interest rate on those is most likely to be higher than the money that you are earning on your savings. Check out what you are paying on the loan and what you are receiving on your savings and you will be able to see for yourself. It could be far better to use your savings to repay the loan and then start putting the money that you would have been using to repay the loan into your savings account. You will then build your savings back up and if you continue to do this, you could accumulate quite a big savings pot.
It can be scary using your savings like this. Savings can give us a feeling of security, knowing that we have some money to fall back on if we need it. However, we could always borrow money if we need it in an emergency and if we are careful, this is unlikely to happen anyway. It is much more likely that you will be careful with what you are spending and get the debt paid off and replenish your savings before you need them. It can help if you keep really focussed and motivated on your goal.
Investments have the potential to give a better return than savings. This means that you could consider investing the money. It is wise to understand more about investments first though. This is because there is a risk with an investment that you might lose money. You might find that the investment goes down in value and when you cash it in you get out less than you invested. You can pick your level of risk though. You will find that the investments vary but it tends to be the case that the more risk you are willing to take, the more chance you could get a higher return but also that you could lose some or all of your money. You will therefore need to decide what risk you are willing to take. You need to consider if you can afford to risk losing any money to start with and if you cannot then investments are not for you. However, if you have money that you could do without then investing it could be worthwhile. The level of risk you go for will depend partly on how much you need the money and on how much of a risk taker you personally are.