How to become an expert saver

One of the biggest challenges we as Brits face today in securing our family’s long-term financial future is finding a way of putting away decent amounts of savings each month. In fact, an astonishing study shows that around 1 in 5 Brits have absolutely no savings whatsoever, which is probably as much a reflection on the difficult financial times we’re facing as it is the general saving habits of our citizens.

The other thing that doesn’t really inspire us to fill up the piggy bank and head to the high street is that interest rates are really very poor. It’s pretty amazing that on a typical cash ISA a decade ago, you could easily earn in the region of 5 per cent. Nowadays, you’re lucky to get much over 1 per cent.

Nevertheless, despite all these discouraging factors, it is still very important to have a rainy-day fund, and, more importantly, to have one that generates a decent return for you. Here are a few of the ways that you can do that…

Cash ISAs

As mentioned above, the rates on these have absolutely plummeted in recent years. But the big gain from cash ISAs is that the interest is tax-free, which obviously means more money in your pockets. You can put up to £15,240 into an account like this each year, and you can access the funds if you need to. M&S Bank offers rates of 1.3 per cent, which, in truth, appears to be top of the pops.

Best savings accounts

The important thing to note is that you shouldn’t just opt for the savings account that’s brandishing the highest rate in big, bold letters. Invariably, there are strings attached, so be sure to check that everything is acceptable to you. A lot of the rates advertised are temporary too, so be sure to factor that in.

That said, it shouldn’t prevent you from taking advantage of some of the good deals – you just need to be prepared to switch provider when deals lapse. Given that recent legislation in 2012 means this process is quick and easy for the customer, and requires the new bank to do all the work, there’s nothing to fear.

In terms of best rates, Santander’s offer of 3 per cent (up to £20,000) stacks up pretty well, while if you have less than £2,000 in the bank, TSB’s 5 per cent is very appealing. Then again, there are other offers too which aren’t just about rates. The Cooperative bank is offering up to £200 as a cash bonus to customers willing to switch to them.

Peer-to-peer lending

An alternative to all of this is peer-to-peer lending (P2P), which involves lending your money to a fellow consumer in need of a loan via an online platform. It’s quick, it’s easy and returns are generally up to 6 per cent. What’s more, a new ISA for P2P will make it even more lucrative. However, it’s important to note that it carries risk, and although companies have safeguards in place if the borrower doesn’t pay the money back, returns aren’t guaranteed.

For the children

Of course, another good exercise is to get your children in on the act, and, aside from helping to ensure that their pocket money is cleverly used, they can learn first-hand the merits of developing good saving habits for their futures. Saffron Building Society offers a children’s savings account with a return of 4 per cent, while Halifax does something similar – albeit without unlimited withdrawals. The other option is the Junior ISA, although there are a set of rules and nuances attached to this which may make it less enticing.

Becoming a master saver

After doing the hard work and squirreling away your pennies, you may feel entitled to then dump your money in savings, put your feet up, and forgetting about it. But it really is worth taking that little bit of extra time to find a worthy home for your savings – and regularly checking to see if there are better deals out there. After working so hard for your money, it’s high time your money started working a bit harder for you. So don’t let the opportunity slip!

*This is a guest post