Before you even think about savings you need to remove your debt. It’s highly unlikely you will be able to earn more interest on your savings than you are losing on your debt. Except for student loans and mortgages all debt is bad, it’s a drain on your resources and by resources I mean money.
Think of your money as little workers. Each pound is a little worker. Obviously some of your workers have to go out and never come back, these are the guys paying your bills, they keep you in light and warmth. You really want your workers to do a good job and come back with some friends who want to join your team, this is what happens when you save money and invest money. Interest, dividend, growth.
The ideal is to live below your means. That’s what Warren Buffett does. Who’s he? My hero and at one time the richest man in the world. He still does pretty good!
Once you’ve sorted out your debts, and you have some money to save go to moneysupermarket.com and find out which savings account is best for you. You’ll need to decide whether to put away a lump-sum or regular payments. The easiest way to save is to set up a direct-debit that takes the money every month on the day you get paid, that way it’s gone before you even realise it. You can build a tidy sum over a couple of years.
Just make sure you pay off your debts first!
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