With a new year often comes new goals and focuses for the year ahead. Some come in the form of resolutions which often end up all but forgotten as January fades into obscurity, others are longer term goals, perhaps working on character traits such as punctuality or putting more of an effort into socialising.
It is in the new year that many also turn their gaze to finances, hoping to manage money more effectively than the previous year; perhaps finally paying off that guarantor loan. It is goals such as this that can be life changing, once you are in a habit of managing your money effectively it not only relieves a lot of day to day stress and worry but can also open up numerous opportunities to the keen budgeter.
One important aspect of budgeting is to incorporate savings into your plan. This will provide you with a safety net were you to lose your job or perhaps just have a desire to buy some of the latest gadgets out on the market. In almost any situation having savings is something very positive.
So once you have worked out your income and expenditure and are looking for a way to make the money you have spare go the furthest it can why not try some of the following?
Effective Ways to Save in 2013
Savings Accounts or ISAs
While back in 2005 you could get a savings account offering around 5% annual interest, the rates offered in 2013 are currently much lower and see no chance of bouncing back anytime soon. This is mainly due to the reduced base rate of interest set by the Bank of England; it has been set at 0.5% since March 2009.
When choosing a savings account you should take a look at your circumstances. A lot of accounts offer the most competitive rates but are not easily accessible; you may not have access to your funds for between 1 to 5 years. This is not helpful if you find yourself needing emergency access to your funds. It is up to you whether the slightly higher amount of interest is worth it.
Instant access saving accounts are generally stuck at absurdly low rates, from between 0.01% and 2%. These can help your money grow with inflation but are of little benefit if you are looking to grow your savings.
Buying Shares
Buying and selling shares is as easy as ever now thanks to the internet. Do not be fooled though it still requires a lot of preparation to pull off successfully. It is definitely a risky business and you can lose your entire savings by making a bad decision. On the plus side if you make the right choices you will see your investment grow much faster than a savings account.
High returns are associated with high risk shares and lower returns with lower risk shares. A new company will often see a large fluctuation in its share price so this is seen as a more risky approach. Buying shares in a long running stable company is much lower risk as the share price will fluctuate much less.
If you are thinking of getting involved in the stock market please be sure to consult an expert.
Premium Bonds
These are very similar to a normal savings account however the interest paid is set by a prize draw in which you can win between £25 and £1,000,000 tax free every month.
For example, if you put £1,000 in you would get 1,000 bonds which are each entered individually into the monthly prize draw. You can cash them out at any time. This is a very popular way to save in the UK. It is important to note that if you do not win in the prize draw you do not lose any money. It is almost like interest roulette with unlimited spins.
Hopefully this has given you some food for thought on how to make the most out of your savings in 2013. Have I missed something out? Let me know in the comments.