Having children can be expensive. Living within your means and putting aside some funds for your family´s future brings several advantages. It means that even if things go wrong in life you can still maintain a reasonable lifestyle, while you solve the problem. Plus, when you are older and maybe cannot work anymore you will have some savings to fall back on.
But, to be able to get this stage, you first have to learn how to save. Part of doing that is identifying which savings vehicles or methods are right for you at the various points in your life.
Savings accounts and ISAs
Take savings accounts as an example. Did you know that there are five main types of ISA available? You need to understand the pros and cons of each type, before opening one, something you will be able to do if you click the link.
For example, if you do not yet have any cash put aside elsewhere for a rainy day, opening a stocks and shares ISA is probably not a good idea for you. This is because the value of those shares can just as easily go down as up. If you desperately needed some cash when the markets were low and had no choice but to access your stocks and shares ISA the chances are you would end up losing rather than making money.
However, over the long-term, the stock market tends to provide a better rate of return. So, if you are saving for something that is not time-sensitive, for example, converting your loft, using this kind of ISA could be a good idea.
If you prefer, you could just open an ordinary savings account. But, again you need to educate yourself a bit before deciding which type to set up. If you have cash that can be tied up for several years, a fixed-term account could work for you. Typically, the rate of interest you get is going to be higher than it would be if you were to use a regular savings account that enables you to access your money, at any time.
Putting money into a jar
For really short term saving projects, like taking the kids to the fair or treating them to a day out, putting your change in a jar could be the way to go. If you use a transparent jar, you can easily see how you are doing. This can encourage you and anyone else who is contributing to that kitty to keep the pennies flowing in.
If you are saving for more than one special, short term goal, you might want to use a separate jar for each one. Or buy a sub-divided money jar or piggy bank.
Use sweep saving methods to save for special occasions
For those savings goals where you have no specific figure in mind, opening an account into which any residue money you have leftover at the end of the month is swept is a good approach. When you are ready to do something like book a family holiday you just choose one that fits in with the funds that you have available in that particular savings account. Taking this disciplined approach will help you to resist the temptation to book something you can´t really afford. This brief article tells you more about how cash sweeping works.
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