Myths and Facts: Savings Explained
As the UK economy slowly emerges from a near three month COVID-19 lockdown, many throughout the country will be concerned about their financial wellbeing. From pensions, family income and inheritance planning to insurances – getting the right information is more important now than ever before.
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.
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.
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 – If I cut Expenses I can 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.