What is the best way to save for a rainy day?

News from the Lincs Free Press and Spalding Guardian, spaldingtoday.co.uk, @LincsFreePress on Twitter
News from the Lincs Free Press and Spalding Guardian, spaldingtoday.co.uk, @LincsFreePress on Twitter

Money Matters by Scott Woods

That trip to see the lemurs in the Madagascan rainforests, the dream wedding or honeymoon, the long, easy-going retirement, not panicking when an unexpected bill hits the mat, your car breaks down or your boiler packs in. Sounds good doesn’t it?

But unless you’re very lucky, most of us only get these things by saving for them.

Are you saving for a particular goal within the next few years, like a house deposit, a new car or a wedding?

Putting aside money as a buffer for a rainy day?

If so, you could choose a bank or building society savings account or a cash ISA (which has great tax benefits).

Some accounts offer you higher interest if you’re willing to tie your money up, others let you get your money out whenever you need it.

If you’re thinking more long term, like for your children’s university costs, you could choose products that invest in stocks and shares.

These can give much better returns than savings accounts, but they are riskier because you can lose money.

It’s up to you if you’re happy to take that risk.

If you’re thinking about your retirement, pensions can be a great tax efficient way to save.

If you put your money into a savings account for a long time, the interest rate you earn might be less than inflation.

The effect of inflation could then mean that your money will not stretch as far in the years to come.

Investments can be a better way of beating inflation than simple savings accounts. Even if you only put a small amount away, it’s worth getting started as soon as you can.

It’s a satisfying feeling too, watching your nest egg grow and planning all the great things you can do with it.