How best to save?

MummyD

I'm starting on a bit of a saving drive. :T We've had savings before but tend to save really well then gradually spend it all - not frittering but on household projects and the like.

Well, we've just completed a massive house overhaul and in a few months we'll be in a position to start saving again.

So, my question is this:

If you have various savings goals (general cushion, new car, children's education etc) is it best to just chuck all the money in one account and save for one thing at a time; or

to split each month's savings into three or four smaller amounts in different places for different things?

We should have between £500 and £750 per month to save.

Any help or advice appreciated!

Many thanks.

kidmugsy

Doesn't it depend partly on time scales? If you're saving for something 15 years away you'd look at different savings media than if you're saving against a rainy day that could occur at any time.

MummyD

It does partly, but should I save say 3 months' income first then start saving for the other stuff or start saving for all of it from the get go just in different ways (say put £250 a month into the bank; £250 into a longer term product and £100 into shares or something)?

kidmugsy

I'd build up your rainy-day fund first: bung everything into an instant access Cash ISA that's got some good combination of interest rate and convenience. Once the pair of you have accumulated (say) six months worth of routine outgoings in ISA tax shelters, then look around for other things. What you try to avoid is having to do expensive borrowing when the "rainy day" turns up.

Eco_Miser

It's ALL your money. Consider it as one pool, which will finance all your projects as they are required, and which is stored in various containers (easy access, regular saver, fixed rate/fixed term, ISAs, Index Linked Savings Certs) to obtain the best balance between growth and availablility. Use a spreadsheet to keep track of how much is earmarked for each purpose, (and to calculate how much to earmark each month for each purpose). Spend money as needed from current account/easy access account, and replenish them if needed (eg as car needs replacing) from notice accounts (and keep moving accounts to follow the best rates). Don't use this as an opportunity for unplanned spending

If you don't think you can manage this abstraction, save for each goal in a different account, but that's less flexible.

Geopulse

I would suggest you to divide your savings according to different goals of yours. Then you can start planning accordingly. Best of luck with your money!!