| Introduction |
| Why save? |
| How much should you save |
| How to beat low rates & risk |
| Savings options |
The simple answer here is ‘probably more than you are currently saving’ and ‘as much as you can’.
Independent financial advisers (IFAs) generally recommend keeping a savings cushion of around three months’ earnings in an easy-to-access account, as ‘rainy day’ money for emergencies or to tide you over if you lose your job.
It can be easy to fall into the trap of believing you don't have enough spare cash to be saving.
But even for longer term stock market investment there are schemes available which will take £50 a month or even less. However, while that is a start, bear in mind that £50 a month is just £600 a year – £3,000 over 5 years, ignoring any growth.
In deciding how much to put aside, it can also be helpful to consider what your goals are and work back from there.
The earlier you start saving into a pension, the bigger the pension you should end up with. Likewise the later you start the more you will have to save to achieve the required retirement income.
Most IFAs normally recommend you save at least 10-15% of your income to achieve a more comfortable retirement.
Note too that in the case of pension saving, your employer (if you have one) may well be contributing to your pension plan as well.
One way of making sure you maintain your savings discipline – and reducing the pain – is by using monthly direct debits or standing orders for your payments. It is surprising how quickly people forget money which is automatically taken out of their pay packets or accounts.
