April is a busy time for our finances, as we welcome a new tax year and experience the repercussions of last week’s annual price hikes.
It’s natural to feel overwhelmed with the news that household bills have once again increased as this makes the cost of living crisis an even bigger challenge. That being said, it also highlights the importance of savings and making sure you are getting maximum value from any money you have in a savings account.
But before you compare savings accounts, you need to take a few steps back and indulge in some financial self care by giving your money a spring clean.
Prices are soaring across the UK, and wages aren't keeping up. To help people manage the cost of living crisis, here are our guides to saving on bills, dealing with debt and raising some extra cash
We should all have some financial goals, whether it is saving for a deposit for a first home, ensuring a future retirement pot remains healthy or paying off high interest debts. So, if you don’t have any goals now is the time to set them. Alternatively, if you’ve always had the same goal, maybe it’s time to check whether it’s still relevant and revise if something else is more appropriate. Once you have your goals in place you can start to create a financial plan…
A financial plan is a great way to detail your current financial circumstances alongside your financial goals which can either be long-term or short-term. This plan will help you to keep track of your money and highlight potential saving opportunities. Within the financial plan you will also be able to dictate a monthly budget that you can then follow during this tax year. One of the most popular ways to budget is the 50/30/20 rule which involves 50% of your salary going towards essential expenses, 20% goes into a savings pot and 30% is for fun!
Household bills have increased once more but to avoid becoming overwhelmed by this news, the first step is to check your bills to see how much they have increased. You can also contact your providers to discuss what the increases will mean for you and whether there is any support available.
It’s always best to know exactly what you’ll be paying each month, so use this increase as an opportunity to audit your finances and evaluate your outgoings.
Now you are armed with the knowledge of your savings goals, financial plan and monthly outgoings you can use this information to find the best savings account. In the financial plan, you should have factored in a realistic savings goal and this will help you to choose a savings account.
Is your goal long-term or short-term? This is an important question as it’ll influence which account to choose. For example, if you don’t need the money for a few years, a fixed-rate bond is a good option because you'll be rewarded with a competitive interest rate. That being said, a fixed-rate bond normally allows one deposit and often no withdrawals at all during its term, so this account would only work best if you already have a lump sum saved. If you are looking for a flexible savings account, then an instant or easy access account ticks a lot of boxes and will help to get your savings on track with the added bonus of interest.
As you are giving your savings a spring clean, it’s definitely worthwhile to review your pension. Firstly, look at your state pension and work out how much money you will receive when you retire. Remember, you’ll need 35 years of National Insurance credits to qualify for the maximum amount. Once you know this figure, then look at your workplace pension and try to group together any old pensions from previous jobs in one place, so you know exactly how much you’ve saved so far. With this information you can then appropriately plan for your retirement.
A lifetime ISA can also help with saving for this purpose as it offers an attractive 25% bonus from the government. The ISA allows you to save up to £4,000 every year and then you’ll receive up to £1,000 from the government between the ages of 18 and 50. You’ll then be able to access the money for retirement when you turn 60 years old.
As a trained journalist, Lucinda has spent the past 10 years writing and editing content for regional and national titles, including The Mirror, WalesOnline and Manchester Evening News. She is now a personal finance editor and specialises in savings, helping people to make confident financial decisions so they can save for what matters most.