Idiots guide to saving money, short and long term

[Matchingcollarandcuffs]

We have just remortgaged to do work there past off debt. It will give us much more disposable income BUT overpayments aren’t allowed.

I have never saved before take, I have an internet savings account that doesn’t really pay interest but need to both save an emergency monthly and then put money back each month so when we remortgage to hopefully a better rate in a couple of years we have a lump sun towards it.

We also need to put the money for building works £110k +) somewhere in the short term . . .

my parents lived pay cheque to pay cheque and I’m determined not to be the same, but literally have no clue.

Each adult in your household has an ISA allowance of £20,000 each financial year (6th April to 5th April).
A stocks & shares ISA is for long term investing, a time period of at least 5 years, ideally much longer.
A Cash ISA is for shorter term but some will lock you in for a time period, others will let you access a certain number of times per year, some are easy access.

Money within an ISA you do not pay tax on the interest.

Instant access savings accounts are easy to use but they pay interest gross. If you get interest which is more than your personal savings allowance, then you will pay tax on the amount over your allowance.
A basic rate tax payer can earn £1000 in savings interest with no tax. A higher rate tax payer can earn £500 in savings interest with no tax.
Additional rate tax payers get Zero savings allowance.
Roughly, a basic rate tax payer will pay tax on savings above £40,000 if interest rate on the account is 2.5%
Money Savings Expert site has a guide to this.

So how much money you have in an account will make a difference to what type of account you use.

Have an emergency fund in an easy access account, 3 to 6 months of expenses, so you have a buffer for if anything unexpected occurs.
Then short term savings I would use an instant access account or a cash ISA which was accessible. Longer term cash I would use a cash ISA with restricted access.

There is no tax on interest up to a certain amount any more so ISAs aren't as advantageous as they used to be.

I would start with the Money Savings Expert forums, start with budgeting, and they will also show an up to date list of the best place to put savings.

You won't need a stocks & shares ISA until you are a long way up your savings ladder as you are starting from scratch.

Build your emergency fund first, then a fund for general savings (holidays, children etc)

And always transfer your savings as soon as you get paid, don't wait to see what is left over at the end of the month, and commit to saving at least half of any bonus or pay rise you get in future

Good luck!

There's also some good advice on this thread, especially the posts from nannynick about resources

Wisest way to use inheritance... www.mumsnet.com/Talk/investments/4646055-wisest-way-to-use-inheritance

Thank you all, that’s amazing. I did have a rough budget but need to knuckle it down and find somewhere to put monthly savings for emergency fund.

Also fancy putting the Max in premium bonds for the next few months too.

So different shifting my mindset to one of plenty, have spent so long fighting fires money wise and feeling awful

Premium bonds not worth it atm. We had the max in there for a year or two but have now removed it all.
Much better to put in a fixed rate account. You don't need an ISA unless you are likely to earn more than £1000 interest in a year or are HR tax payer. If you do need an ISA I just found one fixed at 5% for 5 years.

money saving expert budget planner

Use this to work out your outgoings and income.

For less regular payments (car tax, Christmas, birthdays, holidays etc), work out how much these total, and then set up a new bank account, and a monthly standing order to cover the cost.

Set another bank account up with a smaller regular standing order (ie £50 per month) as an emergency account. Eg. Cooker breaks, car repairs etc.

You should then know how much money you have leftover for savings, building work etc.

Which ISA is this please? X

We used premium bonds for cash we were holding for max 18months for building work- there was nothing better with quick access, risk free that had any meaningful return. Long term I agree it’s not worth it anymore for big amounts. I’d use your isa allowance for anything you don’t need access to in short term.

The Martin Lewis programme this week covered all of this in brilliant detail www.itv.com/watch/the-martin-lewis-money-show-live/2a1827/2a1827a0127

I use pb as a place to put away car insurance/tax and self return tax needed.

Also has a small buffer amount in.
For Christmas/birthday and so on DH and I opened a totally separate bank savings account we both have access too and put what we can afford each month I. Rather than other way around.

@Hydrangeatea

many isa that were on the market in January have gone, brothers bank, Leeds bs are paying over 4%

@Matchingcollarandcuffs

barclays are paying 5% on an account with up to £5000 in it

first direct are paying 7% on a regular saver of up to £300 per month, so about £135 over a year

Lloyds regular saver For customers is £250 a month, you can withdraw and change amount deposited each month 4%

having a combination of the above might work for you, especially if you start them off 2 months apart, then as the first one ends you can use the saved money to top up the next regular saver

once you get to £1000 a year interest you start paying tax unless the money is in an isa