How to get started with building a savings account

The best way to save is to start young and continue throughout your life.

15:19 13 March 2014

When you are young and you want to experience as much as possible, you are wondering about how to move out on your own or about getting education. Many times the concept of saving, and how to do so effectively does not even enter our minds until it’s too late and we’re already experiencing the ramifications of not having a savings account.

Here are a few ways to get started with building a savings account before it is too late:

•    Savings accounts—one of the most obvious ways to save money is to put it into a savings account. The interest earned is not very much, but these types of accounts are often used for emergency or rainy day funds. It is a decent way to separate the money from your normal spending funds.

•    Shares—you have a few options involving shares. You can directly invest in certain shares, choose a managed fund that will combine your money with funds from others to get better investment options for everyone. You can also invest in a Stocks and Shares ISA, which you can either manage yourself, or have someone manage for you. Remember for Independent Savings Accounts (ISAs) that there is an annual cap on how much can be invested. The potential for earnings is typically much better with these options, especially if funds are invested long-term.

•    Bonds—though many of these offer fixed interest, the actual value of the bond may vary depending upon the market and the company or government’s performance. Only funds that you are okay with losing should be used for such a venture since there is quite a bit of risk, but also the potential for quite a bit of growth.

•    Property—property values usually rise and this type of investment can also produce extra income or a lump sum when sold.