There are various times in your life when it will make more sense to open a savings account than others. Even if you think you have little money to spare, there can be other factors at play that make it the optimum time to consider opening a savings account. As long as you have the motivation and can budget to make monthly contributions, no matter how little or large, then doing so now could be ideal.
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Educate and Help Your Kids – An easy and effective way to teach your children about the importance of saving over spending is to open a savings account for them. Obviously only do this when they are at an age where they’ll understand the benefits; later primary school or early secondary school years can be best. There are many banks that will offer savings accounts designed for youngsters, sometimes including a piggy bank to help encourage them to not spend all their pocket money at once.
Interest Rates Are High – When borrowing money, a low interest rate is best, but for savers it’s the opposite. If interest rates receive a hike, then it will be a good time to seek out an attractive savings account. You will have two options, either a fixed or variable rate. Usually going for a fixed rate is the safest option, especially if interest rates are predicted to fall again in the near future. But a variable rate can offer better returns if interest rates do continue to rise.
Preparing to Buy a House – Buying a house is a massive investment and therefore making the most of a savings account is advisable before you start thinking about it. A Help to Buy ISA is a good option, as the government will boost your savings by 25 per cent (with a maximum bonus you can receive of £3,000). So, for every £200 you save you get an extra £50 on top, as long as all the terms and conditions are met. You can also use other savings accounts to boost the total amount you need for a deposit.
Planning for Retirement – Hopefully you already have some kind of pension plan in place, whether it’s through the workplace pension scheme or a private one. As you get older and the years until you retire become fewer, a savings account can be useful for making your work-free years more financially comfortable. Set a goal of how much you’d like to save and open an account that can best support this.
Throughout all stages of life there are many good times to open a savings account. If you’re approaching one of these, consider the options available to improve your financial situation.