Having a pot of savings provides not only longer-term financial security but also piece of mind – Our team of experts have listed some of the main myths and facts around savings which we hope you find useful.
Myth 1 – I need a Large ‘Rainy Day Fund’
Whilst many will agree that having a minimum of three months savings for essentials is crucial – every little helps with unexpectedly large bill and can make life that little bit easier. Too much in the bank and your money will lose value every day because of the effects of inflation.
Myth 2 – You Need a Large Income to Save
This is false – even if you can save a small percentage of your monthly income you can build a useful fund. Even if it means trimming a limited income you can still save – little and often quickly add up.
Myth 3 – You Should be Debt Free Before you Start Saving
Saving isn’t binary – you can both save (as much as you can afford) and reduce debts. A little planning at the beginning of each month will ensure you can save and get your debts down.
Myth 4 – I need to Save 10% of my Monthly Income
Well firstly you can save as much or as little as you can afford – there are no set levels of savings to consider but setting up an automated payment to a separate account will help. This is not a myth in relation to pensions, however, when 10% of income each month can get you a very long way towards a comfortable retirement.
Myth 5 – You need to Save Electronically to be Secured
Digital transactions are certainly easier and allows you to keep a record but so long as you set a monthly, affordable level of savings you can always bank a lump sum when required. It is worth noting also that many bank and savings accounts offer cash back and other incentives.
Myth 6 – I Can’t Afford to Save
Saving is a strategy – you can cut expenses which may well free up funds to invest but you should stick to your plan – if it means cutting expenses then you can save.
In the current climate it is important to have additional funds to mitigate any unexpected or planned expenditures – the key, however, is having the right strategy that is both affordable and sustainable.