Saving & investing

You may have thought about setting up a savings plan or investing before but never quite got around to it. It is wise to make sure that you have some savings to cover you in an emergency or to begin to save for a property. The easiest way to save is to pay some money into a savings account every month. It’s worth setting up a standing order if you can, so the money goes straight from your bank account without you having to do anything.

Your goal

You need to set goals to give you an idea of how much and long you need to save for. If your savings goal is more than 5 years away, putting some cash into investments could allow you to earn more from your money and keep up with rising prices. You may think that you don’t want to ‘gamble’ with your savings but the truth is there’s no such thing as a ‘no-risk’ investment. 

Risk

You’re always taking on some risk when you invest, but the amount varies between different types of investment. When you start investing, it’s usually a good idea to spread your risk by putting your money into a number of different products and asset classes. That way, if one investment doesn’t work out as you hope, you’ve still got your others to fall back on.

Emergencies

You need to make sure you have enough saved to deal with a sudden expense – for example, a broken washing machine or boiler – but there’s such a thing as too much emergency cash. It’s best to split your savings, keep some to hand for emergencies and put the rest where it can work harder for you.

You want to be able to pay for an unexpected repair, but it’s also important to have enough money for a few months in a sticky situation. Say, you lost your job or split up with your partner, and needed some time to get back on your feet – you’ll want a bit more than the cost of a new boiler or washing machine. If money’s short, start small. For example, saving just £3 a day adds up to £1,095 over a year.

A good rule of thumb is to have three months essential outgoings available in an instant access savings account. So, if you spend £1,000 a month on mortgage or rent, food, heating bills and other things you can’t live without, you should aim for £3,000 in emergency savings.

Tools

Savings calculators

Find out how much you need to save to meet your goal or how long it will take you.

Beginners guide to investment

The IMA guide provides an overview of investments, the risks involved and what you might get back.

Your attitude to risk

This 3 step Money Advice Service guide gives you an idea of your attitude to risk.

Mortgage calculator

You can use this tool to see how much your mortgage payments might be.