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Tips on saving required

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Hey, so I’m quite new around here, I’ve only just become debt free as of last week, and I’m now going to start the journey of saving - but you may say I’m an amateur with this. 

My intention is to save as a basic £600 per month, with adding extra where I can at the end of each month before I get paid again. The main question I have is - If you know you have a particular large payment due in a particular month, would you; (a) transfer money into savings but then transfer out what you need for the payment or (b) keep money in the current account and use this to make the payment. 

I appreciate this may not make sense but appreciate any advice from experts!


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Comments

  • MovingForwards
    MovingForwards Posts: 17,149 Forumite
    10,000 Posts Seventh Anniversary Name Dropper Photogenic
    I have savings accounts for different things eg car, home, emergency fund etc and pots for when I retire.

    Created a spreadsheet and I've worked out my fixed outgoings for the year eg gas, electric, council tax, rent, food etc, leaving a few spaces in case I buy anything from eBay or spend on my CC, as bills go up / down the figure gets altered.

    Whatever is left, then gets split between my pots.

    If I don't go shopping, the money I would have spent that week goes into savings, if I spend less than I budgeted for it goes into savings.

    I also move everything 99p and under from my account and split that between my pots, I've moved 1p quite a few times.

    I don't move money into savings and back again, what happens if you forget and miss a payment?
    Mortgage started 2020, aiming to clear 31/12/2029.
  • It may depend on the nature of the savings account.  I.e. if an ISA then generally withdrawing "spend" from that is not recommended as you lose the tax-free status of the withdrawal, and can 'only' put in £20,000 each tax year to an ISA.  Similarly, the savings account may not be "instant access" and instead require you to tie it up for a year or more (fixed), or provide X days' notice (usually 30, 60, 95 or more), or be 'fixed' in as much as they are regular savings (though some do allow easy access, or a a limited number of withdrawals).  Other accounts may 'penalise' withdrawals by removing part of the interest earned.

    In summary, it's neat if you can put it in savings and then use it as needed; as keeping it in your current account may tempt you to spend away more than the sum (though large) you know you need (the having to move it from a savings account to your current account may well be the discouragement to spend more than you truly need to!) - this sort of 'emergency buffer' is well recommended on here and elsewhere, but it depends (and works best) on being accessible.  Savings accounts come in many guises, but the main MSE site has plenty of guidance on them as well as Best Buy tables - typically, the easier the access, the lower the rates of interest, but this is isn't a hard and fast rule and there are many current accounts paying interest too.

    But a budget and planning ahead for known payments (and how these can vary month to month) are good tools for keeping spending and saving objectives on track, and I personally store money away in savings that I know I'll need but rather than leave it in a 0% interest current account.  Congrats on becoming debt-free too!
  • TBC15
    TBC15 Posts: 1,495 Forumite
    Part of the Furniture 1,000 Posts Name Dropper

    Open a Marcus savings account money in and out in the time it took me to type this.


  • Jami74
    Jami74 Posts: 1,284 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    DaveH93 said:
    The main question I have is - If you know you have a particular large payment due in a particular month, would you; (a) transfer money into savings but then transfer out what you need for the payment or (b) keep money in the current account and use this to make the payment. 

    I'm also fairly new to this. I've tried to anticipate annual expenses and put that money into savings each month (eg Christmas, Car tax/insurance etc) and then when payment is due it comes out of savings in one go. On a monthly basis, if I have a payment due out near the end of the month then I will park it into a savings account at the beginning of the month so it can earn some pennies until it is needed, but I don't count it as savings.
    Debt Free: 01/01/2020
    Mortgage: 11/09/2024
  • DaveH93
    DaveH93 Posts: 11 Forumite
    Fourth Anniversary Name Dropper First Post
    I have savings accounts for different things eg car, home, emergency fund etc and pots for when I retire.

    Created a spreadsheet and I've worked out my fixed outgoings for the year eg gas, electric, council tax, rent, food etc, leaving a few spaces in case I buy anything from eBay or spend on my CC, as bills go up / down the figure gets altered.

    Whatever is left, then gets split between my pots.

    If I don't go shopping, the money I would have spent that week goes into savings, if I spend less than I budgeted for it goes into savings.

    I also move everything 99p and under from my account and split that between my pots, I've moved 1p quite a few times.

    I don't move money into savings and back again, what happens if you forget and miss a payment?
    Thank you, this sounds like you have a great approach to saving! My main concern with transferring money to savings and back, is that I may keep dipping into them, which I would like to avoid! 
  • DaveH93
    DaveH93 Posts: 11 Forumite
    Fourth Anniversary Name Dropper First Post
    It may depend on the nature of the savings account.  I.e. if an ISA then generally withdrawing "spend" from that is not recommended as you lose the tax-free status of the withdrawal, and can 'only' put in £20,000 each tax year to an ISA.  Similarly, the savings account may not be "instant access" and instead require you to tie it up for a year or more (fixed), or provide X days' notice (usually 30, 60, 95 or more), or be 'fixed' in as much as they are regular savings (though some do allow easy access, or a a limited number of withdrawals).  Other accounts may 'penalise' withdrawals by removing part of the interest earned.

    In summary, it's neat if you can put it in savings and then use it as needed; as keeping it in your current account may tempt you to spend away more than the sum (though large) you know you need (the having to move it from a savings account to your current account may well be the discouragement to spend more than you truly need to!) - this sort of 'emergency buffer' is well recommended on here and elsewhere, but it depends (and works best) on being accessible.  Savings accounts come in many guises, but the main MSE site has plenty of guidance on them as well as Best Buy tables - typically, the easier the access, the lower the rates of interest, but this is isn't a hard and fast rule and there are many current accounts paying interest too.

    But a budget and planning ahead for known payments (and how these can vary month to month) are good tools for keeping spending and saving objectives on track, and I personally store money away in savings that I know I'll need but rather than leave it in a 0% interest current account.  Congrats on becoming debt-free too!
    Hey, thanks for your reply! My savings account at the moment is just a Barclays everyday saver, nothing fancy, no frills! I’m not sure what the interest applied is, but I can’t imagine it’s much! 

    It sounds like the plan of putting it in savings to at least gain some interest until I need it is quite a good idea, though I imagine it’s just about learning to be self disciplined enough to not overspend or take too much out of the savings once I’ve put it in there! 

    And thank you! :)
  • DaveH93
    DaveH93 Posts: 11 Forumite
    Fourth Anniversary Name Dropper First Post
    TBC15 said:

    Open a Marcus savings account money in and out in the time it took me to type this.


    I’m not familiar with what this is, but will look into it. I’m always conscious of moving money into different places other than my main bank provider, I’m a creature of habit! Would you recommend a Marcus savings account over a Barclays Everyday Saver, I’ll be saving from scratch, so starting when I receive my May salary.
  • DaveH93
    DaveH93 Posts: 11 Forumite
    Fourth Anniversary Name Dropper First Post
    Jami74 said; 
    I'm also fairly new to this. I've tried to anticipate annual expenses and put that money into savings each month (eg Christmas, Car tax/insurance etc) and then when payment is due it comes out of savings in one go. On a monthly basis, if I have a payment due out near the end of the month then I will park it into a savings account at the beginning of the month so it can earn some pennies until it is needed, but I don't count it as savings.
    That sounds like a good plan, best of luck with your saving!  

    I sometimes struggle forward thinking expenses, I have my basic outgoings which I keep on a spreadsheet, and try to keep this updated as and when things change. But there’s only so much we can prepare ourselves for! 

    I like the idea of keeping the larger payments in savings until you need to use it, and especially if you aren’t counting it as actual savings too. 
  • Zanderman
    Zanderman Posts: 4,864 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    edited 28 April 2020 at 9:05PM
    DaveH93 said:
    TBC15 said:

    Open a Marcus savings account money in and out in the time it took me to type this.


    I’m not familiar with what this is, but will look into it. I’m always conscious of moving money into different places other than my main bank provider, I’m a creature of habit! Would you recommend a Marcus savings account over a Barclays Everyday Saver, I’ll be saving from scratch, so starting when I receive my May salary.
    As Marcus pay 1.2% and Barclays a measly 0.25% (dropping I think to 0.01% in July) I think it's a no-brainer!  
    The thing about saving is not just saving but getting some return on it as well - difficult these days with tiny interest rates but there's no reason to not go for the best rate you can get.
  • ColdIron
    ColdIron Posts: 9,816 Forumite
    Part of the Furniture 1,000 Posts Hung up my suit! Name Dropper
    Barclays Everyday Saver has always been a rotten account. You could get 1.20% at Marcus rather than 0.25%. Easy Access, easy to open and easy to operate

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