Savings and ISA's

[LittleBlueBoat]

Hello

How much a month do you put into a savings account or ISA'S?

Is it a good idea to save money right now with the way the economy is?

How much do you recommend be saved as a % of money left after all bills are paid?

Do you count savings as a bill?

It is much easier to save if you do it automatically - money by standing order into a savings account on payday so you never see the money. Rates are often higher for regular saver accounts too.

I've been overpaying the mortgage in preference to building up savings but that is because we are fixed at a high rate - much above what savings are achieving in the bank at the moment.

I think you are recommended to have 3-6 months salary in savings in case of emergencies/redundancy etc. I've always put money into cash ISAs - if you do the stocks and shares one its more of a long term investment. My savings at the moment are in a cash ISA earning 3.2%. Pretty poor rate compared to a few years ago, but instant access. If you can lock the money away you should be able to get a better deal.

what other people can manage to save is irrelevant, you need to look at your income and outgoings and decide what you can afford.

Personally, for the last couple of years I have had standing orders going into "regular savers" where, if you save monthly for a year you get a bonus rate. N&P is currently doing a family e-saver that pays 5% (but you need to commit to these for a year, as if you break the terms you don't get the bonus interest).
I don't see it as a bill, it is savings.
Any spare cash at the end of the month I then transfer into an "high-interest" (haha) instant access account.
I do my ISA at the beginning of the tax year from instant access account, but if I didn't have the cash for that I would be paying into a cash ISA monthly.

It's never a bad idea to have some savings behind you as a rainy-day fund. Look at all the options and think about whether you want to put it away for a long time or whether you might need to access it in a hurry. Also think about whether you're happy to accept some risk in exchange for a potentially higher reward or whether you want it cast-iron safe. e.g unit trusts and managed funds might form part of the mix. With inflation so high at the moment and interest rates so low, it's not as lucrative to save as it was a few years ago but it's still a good habit to get into.

For how much, save what you won't miss. Pay your savings account first with a standing order and you'll quickly get used to managing on what's left.

Having said all that, if you have any outstanding debts, it makes more sense to pay those off first before you go all out on your nest-egg. Credit cards, mortgages and loans all charge more interest than you can typically get on your savings so if you have anything outstanding, make plans to pay those off first... it'll make you more money

Hi

Thanks for the replies

I will have paid off all debt excpt the mortgage, which is fixed for 5 years, at the end of this month.

I'm giving my money a spring clean

I have been looking at savings accounts and cash ISA but i'm really confused by it all

Do you need to access to withdraw your savings or not?
If not there are some good fixed deals but this means you cannot get to your money until the term ends.

Even if your mortgage is fixed - and presumably has penalty clauses attached for early redemption - have a careful look at your lender's policy on overpayments. Some will let you pay back 10% of the opening capital without penalty. I don't know at what rate your mortgage is fixed but would guess that it is still higher than the average ISA.... and taking even 10% out of your mortgage capital can drastically reduce your mortgage term.

Regards your confusion with Cash ISAs and savings accounts, the main difference is that savings account tax the interest at source whereas Cash ISAs don't. There is a cash limit that you can invest in a Cash ISA whereas savings accounts don't have limits. Then what you're looking for are the best interest rates and ease of access, if applicable. If you're happy to put the money away for a year or three or five you are usually offered better rates than if you want to access it quickly. Sites such as www.moneysupermarket.com provide a quick/easy way to compare what you're getting.