This simple guide will give you an insight into the type of savings to make you more financially secure. I am not an expert in the field so always take advice from an independent body such as The Money Advice Service and if you use a financial advisor ensure they are independent and not tied to any bank or financial company.
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After all the bills have gone out, it is important to put something aside for emergencies and for your old age. Did you know the most you can get from a state pension is only £115 a week? Not a lot to live on is it?!
The earlier you can make provisions for your old age the better. Putting aside money on a regular basis in a UK bank account can add up to a tidy sum before you know it. A mix of emergency savings, ISA's and a pension or savings for your old age covers most eventualities.
Things can happen in life that take us by surprise, such as a loss of a job, unexpected repairs or the breakdown of a relationship. At times like these you may need to draw on emergency savings. The Money Advice Service recommend putting aside 3 months essential outgoings in an instant access savings account.
If you set up a standing order or direct debit into a saving account, it won't be long until that money is there, for those unpredictable life events.
A New Cash Isa or NISA is a tax free way of saving. In the simplest term it is a savings account you don't pay tax on. A Stocks and Shares ISA is another option but with this type of ISA you are investing in bonds, shares and funds and is a more risky type of investment. You can save just over £15000 an ISA and this can be a mix of a NISA and Stocks and Shares ISA.
A NISA savings account is especially good for medium to long term investing, such as saving for a house deposit, a wedding, or university fees.
Interest is paid on regular savings accounts after tax has been deducted, unless you are a non tax payer yet with an NISA interest is tax free.
If you want to read more about NISA's including the difference between a Cash Isa and a Stocks and Shares ISA, take a trip to Money Saving Expert.com.
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More than half the people in the UK are not saving for their old age, or are not saving enough for the lifestyle they aspire to on retirement. If you do not have enough saved when you are looking to retire you may have to work for longer.
The basic state pension is based on 30 qualifying years of paying in National Insurance contributions. If you have not paid in the right amount you may not get much at all. The full amount of state pension at a little over a hundred pounds a week, is not enough to live on on its own, and because of this many people have other savings for old age.
Opting into your companies pension scheme or taking out a private pension on top of this is one option. Alternatively putting money aside in a long term savings account, or investing in relatively stable commodities such as gold or property is another.
Recommendations from industry experts always state a pension is worth investing in though. Think of a pension as another savings account with the important point that you get tax relief on the savings. The money you save on a regular basis is invested so that is provides you with an income on retirement. There are also new rules about pensions including being able to take money out of your pension pot early, read up on the rules here.
If you want impartial advice on pensions the Pensions Advisory Service is the place to go.
Tell me, do you have any savings or are you considering investing in a NISA, pension or other savings account?
* This is a sponsored post, all words and opinions are my own