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Saving money isn’t easy. First you need to find the money to save and then you need to find an account that will give you the best return.

We thought we would take some of the hassle out of saving for you and provide you with our top ten savings tips.

If you need more information, our ‘Guide to savings accounts’ is there to talk you through some of the essentials, in more depth, so that you can get yourself the best savings account for your individual needs.

Contents

1.    Divide and conquer
2.    Pay day = save day
3.    Interest-ing
4.    Time does = money
5.    Learn to walk before starting to run
6.    For richer or poorer
7.    Forms, forms everywhere
8.    Inflation
9.    That old chestnut
10.  Don’t forget your ‘shrapnel’

1.     Divide and conquer

• Divide your savings into three areas. Save for the short term, medium term and long term.
• Short term savings should cover your day-to-day needs
• Medium term savings should be in preparation for buying a car, paying for a deposit on a house or paying for an expensive holiday
• Long term savings are those you will use when you retire

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2.    Pay day = save day

• When you get paid, transfer any money you don’t need within the next week from your current account to an instant access savings account via online banking
• When you know you are going to go shopping or if a bill is due, transfer the amount of money necessary into your current account
• At the end of the month, any money you have left in the instant access savings account can be moved to a mini-cash ISA or another higher interest paying account
• If you don’t have online banking, this method won’t really be suitable. However, try to save some money each month to get into the savings habit

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3.    Interest-ing

• Try to remember that interest given on savings will be taxed at your highest rate
• You are entitled to £3000 (£3200 in April) worth of tax free savings in each tax year when you save in a mini-cash ISA (Individual Savings Account)
• If you have any of this entitlement left then consider making use of it to boost your savings even more

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4.    Time does = money

• Remember that some savings accounts have better interest rates if you agree to leave your money untouched for a longer period of time
• Make sure you stick to the terms and conditions regarding when you can access your money otherwise you may lose some or all of your interest

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5.    Learn to walk before starting to run

• When you start saving, only contribute to your short term savings
• This will prepare you for those unexpected expenses, such as the car breaking down or the washing machine breaking
• When you think you have enough saved to cover you in times of hardship begin saving for the medium term

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6.    For richer or poorer

• If your spouse does not pay taxes, or pays basic rates, but you are a higher rate taxpayer, transfer any spare savings into their name
• This then uses their spare personal allowance and prevents tax being charged on the interest earned

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7.    Forms, forms everywhere

• If you have an ordinary savings account and are a pensioner or non-tax payer, make sure you fill in form R85
• This will mean that you can receive bank and building society interest without having tax deducted

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8.    Inflation

• When choosing a savings account, consider the effect of inflation
• Inflation currently stands at 2.2% (as at February 2008)
• Make sure you choose an account with an after-tax AER that at least matches inflation or your money will buy less as each year passes (decrease in value)

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9.    That old chestnut

• Don’t forget to shop around
• There are hundreds of products out there to choose from
• Be sure to know what you need and want before you start considering products
• Use our ‘compare savings accounts’ service for a clear picture on which account will offer you the best rates and deals and to make the switching process easier

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10.   Don’t forget your ‘shrapnel’

• A recent Building Society study found that across 50 households the average amount of £4.41 was found hiding down the back of our sofas
• When you return home from shopping take all of the 1ps, 2ps and 5ps out of your pocket/purse and pop them in a jar. It will soon add up and can be used for treats like shoes and gadgets

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