Money Saving For Your Future
Make Your Money Work For You

Money saving, this seems to be something we would all like to do but many of us just can't find the extra cash to do it.

Or is it simply much nicer to spend our money rather than saving it for our futures.

Well whatever the reason, it certainly should be something that we all spend some time at least thinking about and planning to do sometime in the future. It should really be an important part of your frugal living plan.

Firstly, money saving should not be considered by anyone with debts to pay off.

This might sound a bit obvious or strange, but I have come across some people who are ever so chuffed to tell me that they have money put away for a rainy day when I know that they struggle to stay on top of credit card debts or loan repayments.

The simple fact is that the interest earned in a savings account is much lower than the interest added to your debts.

It makes much more sense for your frugal saving plan in the future, to clear your debts as quickly as you can with any spare cash you have and then save later.

Money saving, what's the best way to do it?

There isn't really a best way and there are many ways to save money as part of your frugal living, all have their advantages and disadvantages.

It will be very much your own personal situation that determines which way you decide to save your money, but having all the basic information about the different saving methods is definitely the first step to making that decision.

Leading a frugal lifestyle will of course help you to save up your pennies and it will give you the basic tools for self discipline. I hope to outline the various other ways money saving can be carried out and leave the finer details of current interest rates etc to the expert financial web sites.

The simplest way

Piggy Bank - this is always the way most of us learn about saving from a young age and is the simplest frugal way to start your saving. You simply put money into a china pig and after a while you break it open and you have a little pile of money to spend.

The only problem with this is that what you put in is what you get out; it has not earned any interest for you. However for someone who can only put away the few lose coins in their purse every week it is certainly a good starting point.

The riskiest way but possible the most rewarding way

Investing - buying shares on the stock market with your money can bring back good returns. However it comes with many risks.

Unlike savings accounts where your money sits and earns interest, shares can go up and down in value. So if your share value drops, your initial investment of $1000 may only be worth $600.

However if you are able to leave your money in your shares for a long time and do not need to use the money, over time your shares may go up again. Investing is something that needs a lot of research and should not be entered into without proper financial advice from a shares broker.

Everything in between

There are three main ways that most of us choose to save our money, all varying in the amount of interest that can be earned and type of access restrictions. The basic rule of money saving is to put your money into the best interest yielding savings account open to you first before you consider others.

The following savings accounts are in order of making the biggest return for your money (these are based on the UK and may vary elsewhere):

Cash Instant saving accounts (ISAS) - These accounts are just like normal saving accounts but are tax free up to a certain amount every year.

This is great news as most normal savings accounts are taxed around 20% on the interest every year.

Regular savings accounts - these accounts require you to make a regular monthly payment into the account and in return offer a higher rate of interest than just a normal saving account.

They also allow you free access to your money unlike some fixed-rate accounts.

Normal savings accounts - these accounts normally don't have a great rate of interest. It is always best to shop around for the best rate as they can vary quite a bit from bank to bank.

So why is money saving so important?

Possibly a silly question but one that worth thinking about for a while. I know I used to save money just because it was something I was taught to do as a child, mainly to buy toys and sweets with.

But I wasn't really thinking about why saving some money was a good thing. By taking the time to realise why money saving was so important it made my saving ability much easier as I now had clear goals and purpose for my money. Now it fits nicely with my frugal lifestyle and i haven't looked back.

The four main reasons for saving are:

• To buy something specific - saving for some thing rather than buying it using credit and then paying interest makes the most sense. It is certainly part of a frugal lifestyle and using frugal savings wisely.

  This does take some determination and patience but is the key to remaining debt free.

• To cover emergencies - life will always throw unexpected events at us all and when those times hit it is good to know that you have a pot of money to fall back on to see you through.

• For your children's future - one of the best things you can do to help your children in the future with their university education and starting out on their own is to present them with some money they can use without having to get themselves into huge debt.

  This is something that will become more and more important as prices continue to rise and government education loans decrease.

• For your retirement - they tell us we are all living longer these days and that means that our money will have to stretch much further than before.

• If we want to have a comfortable retirement and not have to worry about looking after ourselves once we have stopped working, having a long term high interest saving plan in place will give us peace of mind. A frugal living can certainly make a big difference to all of our futures.