Government spending reduction sets example

Sometimes reducing spending and focusing on your savings account yields better results.

12:31 30 May 2013

Some agreements have been reached for reducing spending, though the details won’t be released until the next spending review.

Everyone will be wondering what programmes and areas will be impacted by changes, and many will wonder about the state of their finances if social funding spending is reduced significantly.

This will probably be a year for careful spending, and more depositing in the savings account. Spending by the public undoubtedly helps the economy, but individuals don’t always benefit from spending instead of saving.

Here’s how you can strike a balance between your spending, and growing your savings account.

• Goals-the first step to being able to have a balance between spending and saving is to figure out what you have available after your expenses have been deducted from your monthly income. Ideally, you want to put more into your savings account than you use for extra spending money.

 

• Savings-once you’ve set yourself some goals, you should get that savings account set up as soon as possible if you haven’t already. If there is a minimum amount you need in order to open one, get a clean jar and start stashing your “savings” money in there as soon as you receive your pay.

 

• Types of accounts-this may take a bit more work, but in order to get the best return you might consider getting a Cash ISA or Stocks and Shares ISA instead of a regular savings account. If you just want emergency funds you could use the regular savings account, but if you’re planning some long term savings goals, definitely go with the ISAs for better interest rates.

 

• Follow through-this part is sometimes the toughest as many of us have learned. There’s always something that seems to come up and interfere with our savings plans and before you know it the year ends with a less-than-stellar account balance. Setting up automatic deposits to your savings account, if it’s available, can help you meet your goals.