Newbie Needing Help to Start Saving

TheBunting

Hi everyone :T,

I'm new to this website but liking the look of all the tips. I'm 22 and have 3 months left of my 4 year plumbing apprenticeship so have been short on money for a while but eventually going to be on some decent wages. Now I am about to be coming onto a slightly better wage for my 2 year probation period as a tradesman (roughly £1600/1700 pm taking home), I need advice on how I can start saving.

When I put my mind to it I can save quite good so that's not the problem. It's what to do with the savings that I need help with. I see a lot of people have opened up several accounts for maximum interest rates and use a system. It confuses me so need help on what types of account to open up to get started.

To breakdown my outgoings, I have £450 going out in digs, car, insurance etc. that leaves over £1000 a month. Judging other essentials like food etc that would leave me with £850/900. I have no idea what the best way is to do with the spare money. Put it into savings accounts or straight into an ISA?

Any help would be appreciated

eskbanker

Start with interest-paying current accounts as listed at http://www.moneysavingexpert.com/banking/compare-best-bank-accounts#interest, TSB and Nationwide pay 5%, albeit on smallish amounts, so open these first and fill them up.

Also consider regular savings accounts if you're happy to commit to saving a certain amount per month, see http://www.moneysavingexpert.com/savings/best-regular-savings-accounts

Ignore cash ISAs, for now at least! Stocks and shares ISAs may make sense once you've built up a decent savings pot as a rainy day fund, if you're interested in saving for the long term rather than, say, house deposit in a few years time....

Zanderman

TheBunting wrote: »

I have no idea what the best way is to do with the spare money. Put it into savings accounts or straight into an ISA?

Neither! Savings accounts and ISAs offer rubbish interest, despite claiming to be for savers! If you want some reasonable interest avoid them.

As Eskbanker says above, start with Current Accounts - TSB Classic Plus and Nationwide FlexDirect first (5%) then Lloyds Club (4%) and then Santander 123 and Tesco (both 3%).

All have limits on what they'll pay interest on and all have some regular hoops to jump through (minimum monthly pay-ins usually - though you can of course withdraw that amount each month too).

Some regular savers are good too (4 to 6% available) though most are conditional on certain current accounts and all have limits (usually £250-£300) per month. Bear in mind most of them expire after 12 months and you have to start over again - and the rate is only cumulative of course, so you only have the full 4 or 6% on the first month's contribution.

Long-term (locked in for 5 years) cash ISAs have some half-decent rates, but only about 2.5% max at present. No hoops with those though, apart from the 5-year lock-in.

colsten

http://www.moneysavingexpert.com/savings/which-saving-account

eskbanker

colsten wrote: »

http://www.moneysavingexpert.com/savings/which-saving-account

Quite a good article that, I hadn't spotted it before, absolutely tailor-made to OP's question (and consistent with my answer too )!

TheBunting

Hi everyone,

Thanks for all the feedback. So as it stands I should focus on current accounts? I like the TSB one. Will it work if I just withdraw and the deposit £500 to trigger the interest rate or is it more complicated? I am starting from scratch but can easily save £500 in the first month to start this. I have a stocks and shares ISA that I don't aim to ever touch at all, unless there is an emergency and I need the funds. What's my next move when I max out the £2000 for that account? Just open up an additional one and then juggle money between the two to trigger the interest rates?

I know it may be alarming that I am 22 and have no savings, but my first years in my apprenticeship I was on poor wages but still managed to save up for a brand new car in 2012 and to go on holidays and nights out with my friends. I want to tighten the screw a bit and with the wage rise at the end of June I aim to start saving massively. Best time to do it when my outgoings can be this low. Just need to stop the excessive gambling and nights out and impulsive shopping online. :rotfl:

The saving starts now!! :A

colsten

TheBunting wrote: »

So as it stands I should focus on current accounts?

Yes

TheBunting wrote: »

I like the TSB one. Will it work if I just withdraw and the deposit £500 to trigger the interest rate

yep, it's as simple as that

TheBunting wrote: »

What's my next move when I max out the £2000 for that account? Just open up an additional one and then juggle money between the two to trigger the interest rates?

unfortunately, they apparently now enforce the max 1 sole and max 1 joint account rule for the TSB Plus. So you could add an account from another company, e.g. Tesco. You can do 2 x £3K @ 3% there. Or Nationwide FlexPlus, 5% on £2.5K for max 12 months. Once you have at least £4K, you could also consider Club Lloyds. Or whatever will be available at the time you need it.

As has already been mentioned, there are also some Regular Savings accounts that pay great rates (4 and 6%).

TheBunting

colsten wrote: »

As has already been mentioned, there are also some Regular Savings accounts that pay great rates (4 and 6%).

Hey Colsten,

Thanks for your reply. As for the Regular Savings accounts, surely there is a max amount and other conditions for them to yield such generous rates?

colsten

I make it some £1,400 to £1,900 a month on 4 and 6% Regular savers:

6%:
M&S: £250
FD: £300
HSBC: £250 (also got a 4% version)

4%:
Club Lloyds: £400
KRBS: £500 (provided you have access to a Branch)

All bar the KRBS one pre-req their current account. M&S and FD also have signup bonuses (£100 each atm) if you switch a current account to them. You can switch any old (or new!) current account. May be start with M&S, it's a relatively simple one.

Zanderman

TheBunting wrote: »

As for the Regular Savings accounts, surely there is a max amount and other conditions for them to yield such generous rates?

See my earlier post above...
(Edit - beaten by Colsten, again! I'll get me coat...)

colsten

Over to you, Zander, I'm done for the day