Understanding A Savings Account
Since Covid19 has hit, many of us are now struggling to make ends meat. Thousands of people are either on furlough OR have lost their jobs. It is now more important than ever to save every penny we can. For those in a position to be able to save, whether it is for your future, any children or things you want, a savings account is a great way to achieve this goal.
But what is a savings account, How does it work? Let's take a look...
What is a Savings Account?
A savings account is a separate account from your main bank account, where you can put money aside, which will also build up small interest over time. ( interest in a savings account is money that the bank add on for money that you leave untouched in your savings ).
How do they work?
It is hard to define a savings account. Different banks have different types of savings accounts and rules for these accounts. For, this post I've based an example from Nationwide Building Society.
These are some of the savings accounts nationwide offers, plus these are instant access.
(Best if you need emergency money for any unexpected happenings).
These are just some examples, you can pick and set up an account to what you need.
(Image from Nationwide website).
Now in the middle, we see interest rates. These can be confusing for anyone who doesn't understand percentages or struggles with money. To this day I struggle to understand them!
Here's a brief clip from YouTube explaining interest on a savings account.
Sounds pretty good right?! BUT you must be careful with these accounts! Just because the money is there, doesn't mean it has to be spent. Remember what you are saving for.
To find out more information on a Nationwide savings account click here! Learn how they can help you find the right savings account. On the other hand talk to your local bank and see what they can offer you!
How much should I save?
This question all depends on your income, what you want to save for and how much you can afford to put aside. If you are determined to save your money then you must consider these factors.
You need to first create a budget. You can check out how you can do this in my previous post here!
Then from you should be able to see what cash you can put aside. As the saying goes, ' A little goes a long way'.
If you want to put more aside than what you can afford you have 2 points to consider...
1) Don't push yourself. We all want to save, especially now when times are difficult. But be realistic, even if perhaps you can only put away £1 a week, that's better than nothing. Do not leave yourself short.
2) Revise your budget. Look at your budget and figure out if you can cut back and where?
Lastly to this point, Make a promise to commit. Don't be tempted into spending the money, remind yourself each day if you need to what you are saving for!
In my next post, we will look at how to save money with food shopping and other essentials! Subscribe now to get a notification when its out!