Maximise your interest in saving.

Do you ever find yourself approaching the Christmas holidays and thinking to yourself ‘I wish I had saved up to buy presents’? Perhaps that holiday you have been dreaming of for a long time always seems out of reach because you never seem to have any money at the end of the month. Many ask themselves the question ‘what’s the point of saving when I only have X amount left in my account at the end of the month?’.

There is a massive point to saving. Whether you are building a pot of money for a wedding, a getaway, a deposit for a house, a rainy day or a new car, putting a little aside each month (however much that may be) will help you reach your goal.

Firstly, it’s important to save within your means. Many start out with grand ambitions when saving and put more money into their savings account at the beginning of the month than they can afford. They find themselves gradually throughout the month dipping into their savings to pay for ‘that meal out’ or ‘that unexpected bill’. Suddenly at the end of the month they find themselves with little to no money in their savings account.

The trick is to start out small. Have a think about how much you think you would like to save, and then quarter that amount. We all like the idea of having huge amounts in our savings account at the end of the year, but sometimes this just ends up being unrealistic. By starting with a small amount there is a greater chance that you won’t end up dipping into the big pot of money you planned on saving at the beginning of the month, and although the growth of your savings pot will be slower, your savings morale will be higher. If you find at the end of the month you still have some money left over, then you can also put that into your savings account.

You might be saving for something in particular; when planning on what to save for, try to consider if you are going to need access to that money on a regular basis. There are many savings accounts and different ones will give you varying amounts of interest. If you are never quite sure when you may need the money or are saving it for a ‘rainy day’ you may want to consider an instant access account. This typically means you will be able to withdraw your money without giving your bank or building society any notice. What you gain in access to your money you tend to lose in interest and instant access accounts typically will not give you a high yearly return.

When planning on saving on a regular basis there are certain accounts out there that will give you a baseline interest rate but then reward you with a bonus for saving regularly and withdrawing (either not at all or a limited number of times). These accounts tend to be for those who do not intend to withdraw their money regularly or are saving up for a one off expense at a certain moment in time. These accounts will give you a higher rate of interest but limited access to your money so it is important to bear this in mind before opening these type of accounts if you will need quick access to the money at any point.

If you do find that you have a lump sum saved up and you are certain that you will not need access to the money in the immediate future, you could always look at putting the funds into a fixed interest account. These accounts typically will reward you with a much higher rate of interest than an instant access account but you will have access to little to none of the money until the term of the account expires. These accounts allow you to put your money away for a specific amount of time so it is very important before opening one of these accounts to consider whether you are going to need access to it any point.

The main points to remember when saving are:

  • Saving within your means
  • Picking the right account for your current financial situation and;
  • Shopping around for the right account paying you the most amount of interest you can earn for your given circumstances.

Whether you are saving £10 a month or £500, no amount is too small to start and you will find once you have caught the savings bug and begun a regular routine of saving you will never look back.


Learning and Development Advisor at the Gibraltar Financial Services Commission

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