A comprehensive list of the new UK tax allowances and thresholds for 2020 / 2021
Expert opinion suggests saving between 20% of your salary each month and having a lump sum equivalent to at least three months’ pay, but how much you can actually put into a savings account each month will depend on your earnings and outgoings. There are money management apps now available that can connect to your bank account and track what you are spending. They then identify opportunities where you might be able to save money. Some bank accounts now allow you to round up your spending to the nearest pound and place your money directly into your savings account – in effect trying to save it before you spend it.
This became an online trend at the beginning of 2020 to prompt saving for Christmas. You save 1p on day one, then on day two, you save 2p, and each day you increase the amount saved by 1p. When you reach 100, you then move into pounds and pence, so on day 101 you save £1.01. Over a year of 365 days, you could save £667.95.
Most experts recommend having three months’ salary available. If you are made redundant or are unable to work due to ill health, then this gives you a buffer while you make alternative arrangements.
According to Raisin UK, in 2020, the average savings pot in the UK was £9,633.30 and it found that nearly one in five of those over the age of 55 had less than £1,000 saved up.
Start with a savings goal – this should be the amount you need for your house deposit. You can then use the calculator above to see how much you need to save each month to reach your goal. You should also consider a Lifetime ISA, because when you save into these, the Government also gives you a cash bonus. We’ve compiled some tips to help you improve your chances of getting a mortgage.
Once you know how much you want to save each month, you will then need to find a savings account as a home for your money. An easy access account is usually the easiest place to start saving, with the least restrictions on how you can access your money. Our guide to managing your savings account will tell you more about the different accounts available and how often you can typically add or withdraw your money with each type of account.
A guide to what challenger banks are and their rise in popularity.
A guide to what challenger banks are and their rise in popularity.
Every basic rate taxpayer in the UK currently has a Personal Savings Allowance (PSA) of £1,000.
How are my savings taxed?
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