Top 5 rules for saving safely
Debts weighing you down? Start saving with these tips
13:24 27 October 2014
We all become worried about our financial safety and stability after bank collapse, defaults, the recession and the uncertainty of the global market trends. Such issues give people sleepless nights making them think about how to secure their finances during economic crisis. Fortunately, there is still hope for saving money despite the problems experienced in the global economy.
Learn how to save as much as possible by reading through the following rules and protect your heard-earned money.
- Secure yourself against crashes
- Keep your money in safe places
- Think about the future
- Identify other safe places apart from banks
- Overcome inflation
RULE 1: BE SMART. DO NOT SAVE £85,000 OR MORE IN A SINGLE FINANCIAL INSTITUTION. INSTEAD, DISTRIBUTE YOUR SAVINGS.
Currently, the FSCS (Financial Services Compensation Scheme) only covers a maximum of £85,000 of your total savings you make in each financial organization. In this regard, having £85,000 in a single bank at a time guarantees that you will get your cash back in case of a bank collapse or bailouts. Nonetheless, you ought to be patient because the process of obtaining the cash may take some time.
Any amount that exceeds £85,000 is lost though. Similarly, having more than £170,000 present in a joint account is dangerous because the money might disappear in to thin air. So, distribute your savings to be on the safe side. Do not get caught up in the middle.
If two banks operate with a similar financing license, then the combined protection offered by the two institutions only covers not more than £85,000. For instance, you may assume that Bank of Scotland and Halifax function individually. However, the two are constituents of the HBOS group and work under the same license. Hence, the Financial Services Compensation plan in this case would cover £85,000 between the two banking institutions.
It could be difficult to identify the organizations that function under once license. So, do some personal research but make sure that you do not exceed your allowance limit.