want to start saving!!

sugarplum10

I have an isa with nothing in it, I have no lump sum!
It is better to start saving into the isa to build up a lump sum or is it better for me to use another savings account and then transfer in a lump for next year??
What is the best non isa account i can use.
Im at a total loss at how to start saving but i want to get the maximum out of our savings as i can. I have approximately £100 a month spare but I would like to have access to this if i have to replace white goods or something similar.
many thanks
sugarplum:D

bigadaj

Put the money straight into the ISA, particularly if it is around £100per month. ISAs are use it or lose it, so if you don't use it by the end of the tax year it is finished and you get a new allowance for the next year. If you do withdraw you lose that amount, eg if you invest five hundred withdraw three hundred then you can put back in the total allowance minus the three hundred.

The money is tax free so no point saving elsewhere first and paying tax, make sure there are no penalties for withdrawal if you think you might need to.

Remember that whilst you should build up a cash emergency fund, it's often more efficient to pay down debt so look at doing that rather than paying far higher interest on debt and having savings that only earn a couple of per cent.

MoneySaverLog

You're probably paying more in interest on the debt than you would get from a cash isa. If that's the case I'd get the debts sorted first then look to start saving afterwards.

Over the longer term you'd be better off doing that.

sugarplum10

i know im paying more for the debt but we have no savings so we need to save for all of our 'lump sum' payments like car insurance etc and MOT which was 230 this year EEKKKKK!!!.
we also need to have a pot of money for school trips, daughters swimming lessons- yes i do think this is essential as its the only thing she does outside of school and as we live in devon its important for her for safety.
we need to save so im not bothered about the interest, besides the interest is frozen on my debts as i have a debt agreement through the Payplan.
thanks anyway.

Lokolo_2

Sugarplum10, you don't make it clear if you are a taxpayer or not? If you are then an ISA may be worthwhile as you get tax-free interest, however it should be an Instant Access ISA as it looks like you'll need access to the money for the reasons you mentioned you're saving for.

Have a look here if the rate of your ISA is relatively low, as you can simply open a new one if you haven't yet contributed to one this year.

In principle I agree with the others that debt should be your first priority and then start saving, however if you don't pay interest or only very low interest on your debt plan then maybe savings can be an option.

amiehall

I would be wary of putting all your free money towards debt if you have NO savings though. If you're on a payment plan, you're not going to be able to get much more credit (not that you'd want it) and if, as you mention, the washing machine packs in or something, you're going to be totally ****ed.

I'd always suggest trying to get at least some money saved up regardless of the interest rate on your debt. An ISA is a good place to start this. Good luck building your savings and clearing your debts

MoneySaverLog

Yes it makes sense to save for contingencies in that case, if interest is frozen whilst in a payment plan.

atush

Get an instant access cash ISA if you pay tax, and an easy access savings acctif you dont. ISAs are to save tax on the interest, so are worth having if you pay tax on your salary.

If you haven't already, go to the debt free board and post an SOA, and see if your spending can be trimmed.

It is sad when people get into debt, but seems you have already taken the bull by the horns and got an VA to pay it off, and the interest frozen will help hugely.

So saving will help you pay for things that are needed w/o future debt. Good luck getting back on track.

sugarplum10

I dont earn enough to pay tax at the mo as mat leave has taken me below the threshold but i will be back to work in sept to an instant access isa looks like the best option.
thanks for all of your replys.