New to saving and trying to plan ahead

Faelina

I stumbled across this fantastic website a few days ago when researching savings accounts and I have some questions...

I have just started in a new job, giving me a larger income than previously, and rather than follow old savings patterns (which haven't got me very far) I thought I would use the time before my first month's earnings come through to educate myself and plan future savings goals.

I note in the articles on this site its recommended you aim to have:

• Mini-Cash ISA = £3000 per year
• Regular Saver Account
• Standard Savings account

My questions, I suppose, are about how to structure several accounts:

• What balance should you aim to keep in your current account? Just enough to cover your budget?
• Is there a limit to how many Regular Saver accounts you can have. I noticed some banks etc specify only one Regular Saver account is allowed per person. Can you open another one with a second bank?
• To maximise return for Standard Savings accounts - should you put as much in to one account as you can, or should you aim for a maximum figure?

How would you plan ahead?

YorkshireBoy

Faelina wrote:

I note in the articles on this site its recommended you aim to have:

• Mini-Cash ISA = £3000 per year
• Regular Saver Account
• Standard Savings account

My questions, I suppose, are about how to structure several accounts

This is the "savings fountain". Imagine a tower of champagne glasses, with the ISA glasses at the top and the standard savings glasses at the bottom. If you pour the champagne into the ISA glasses, these will fill up first. Any "overspill" will trickle down into the regular savings glasses, and overspill from these will trickle down into the standard savings glasses. This is widely recognised as the most tax-efficient, highest interest earning way of saving to MAXIMISE your returns.

Faelina wrote:

What balance should you aim to keep in your current account? Just enough to cover your budget?

I use Microsoft Money to manage my finances, and never let my current account balance fall below £200. Another tip here is to try and get all your bills, eg direct debits etc, to go out on the same date each month. Mine are all set up for the 5th of the month as I get paid on the last Friday of each month.

Faelina wrote:

Is there a limit to how many Regular Saver accounts you can have. I noticed some banks etc specify only one Regular Saver account is allowed per person. Can you open another one with a second bank?

Yes, there is no restriction on the number of accounts with different providers - other than your own ability to keep feeding them!

Faelina wrote:

To maximise return for Standard Savings accounts - should you put as much in to one account as you can, or should you aim for a maximum figure?

Not sure I understand this one, but the fewer accounts you have will mean less time spent with account Admin. With standard accounts, I would just pick one of the online high interest type - there are several paying in excess of 5%.

HTH
YB

calleyw

Faelina wrote:

I stumbled across this fantastic website a few days ago when researching savings accounts and I have some questions...

I have just started in a new job, giving me a larger income than previously, and rather than follow old savings patterns (which haven't got me very far) I thought I would use the time before my first month's earnings come through to educate myself and plan future savings goals.

I note in the articles on this site its recommended you aim to have:

• Mini-Cash ISA = £3000 per year
• Regular Saver Account
• Standard Savings account

My questions, I suppose, are about how to structure several accounts:

• What balance should you aim to keep in your current account? Just enough to cover your budget?
• Is there a limit to how many Regular Saver accounts you can have. I noticed some banks etc specify only one Regular Saver account is allowed per person. Can you open another one with a second bank?
• To maximise return for Standard Savings accounts - should you put as much in to one account as you can, or should you aim for a maximum figure?

How would you plan ahead?

I assume that the ISA is being used as a long term savings, the regular savings plans as medium term and the standard savings as your emergency fund.

You might find a ING account handy as they allow you to have different savings pots. So you could have Xmas, birthdays, car etc pots.

With the your current account work out what your bills are per month then add an extra £20/£30 on top as a little extra. You can always move the excess across to a attached account. Just incase your electric/gas bills are higher than you expect. If you don't pay by monthly DD.

You can have as many banks accounts as you like.

Yours

Calley