Savings Top Tips

1. Saving is not difficult. It's all about planning and keeping some of the money you have today to use at some point in the future, whether it's next week, next month or in twenty years time.

2. Break down your savings into three areas - and this is the really easy bit: short term, medium term and long term. Short term should cover day to day needs, medium term can help with things like a deposit for a new car or house and long term is essentially retirement planning.

3. Try to move some money every month from your everyday current account to a savings account. Apart from the fact that this will give you a bit of a cushion and some peace of mind that you have an emergency fund, you will also find that the rate of interest paid on a savings account will be higher than that paid on your current account.

4. Think about the tax implication of any interest you make from your savings. Remember that interest on savings accounts or CD's may be taxed at your highest rate, so if you have not reached your maximum contribution limit on your Individual Retirement Account (IRA) or 401k pretax contribution you should think about doing so in order to earn interest tax free ($15,500 was the maximum limit in 2008).

5. You have to consider whether you need your savings to produce capital growth in the longer term or an income either immediately or in the near future. You may be able to combine both.

6. Not all savings are risk free. While money you put in the bank should be safe, the same might not be true for money invested in the Stock Market, either by buying shares directly or by investing in Unit Trusts or Investment Trusts. Bear in mind that the value of such investments can fall as well as rise, and that you may not get back the full amount of your investment. You should think carefully about how much risk you are prepared to take with your money, and only invest in risky areas if you are prepared for a potential loss, especially in the short term.

7. Remember that some savings accounts offer better interest rates if you agree to tie your money up for a certain length of time. So you may get an extra 0.5% if you don't touch your savings for a year, or if you agree only to make one withdrawal in the first six months. You should make sure that you can stick to these terms at the beginning since if you try to take your money early you may lose some or all of your interest.

8. You should try to put money aside regularly for vacations and gifts rather than hoping you will be able to pay for these out of normal income, or worse still have to borrow to pay for them.

9. Before you think about medium or longer term savings you should build up an emergency fund that is easily accessible in a high interest bank or building society account. This will help you to take care of any unexpected large purchases