Bringing up baby

Financial watchdog the Financial Services Authority this week launched a baby budgeting scheme. All pregnant women will receive information packs detailing the financial benefits available to them and explaining how they can make the most of their child trust fund entitlement.

It’s clear the Government is keen for us to start saving as soon as we can, but for those of us already out in the big wide world we’ll have to take the saving steps ourselves.

How much to save, where to save and when to save it is however a tricky question to answer. Most financial advisers suggest that it pays to spread your money across a range of investments and savings accounts. looks at a couple of life stages and makes some suggestions on the day to day products you could be putting your cash into.

Starting off

For most twenty something’s the priority is to become debt free. If however you find that there’s cash left over at the end of every month then the obvious place to put it is into a cash ISA. An ISA or Individual Savings Account allows you to save up to £3000 tax free.

Tipton and Coseley’s mini-cash ISA pays out 5.70% while Kent Reliance for example offers an ISA which pays 6.05% interest. Both of these are instant access accounts meaning you can withdraw money without notice or penalties.

If you’re unsure you’ll be able to resist withdrawing the cash then a notice account could serve you well. Saffron Building Society’s mini-cash ISA comes with a 90 day withdrawal notice period as well as a healthy interest rate of 5.55%.

Adding to the nest egg

As you get older the chances are your income will increase significantly and you may well be looking to save more than £3000 a year. If you wish to retain easy access to your money then a savings account or e-saver could do the trick.

By setting up a standing order to a savings account you can ensure that you save a fixed amount each year. Norwich and Peterborough Building Society’s Family Regular Saver account for example pays out 8% up to £250 a month meaning that you will have well over £3000 saved by the end of the year.

Alternatively equity ISA offer an efficient way to save, and it’s tax free once again. These products take your cash and invest it in company shares. Unlike cash ISAs they do not offer a guaranteed return. The amount you receive back will depend on how well the companies your ISA invests in perform. F&C Investments, Scottish Widows and Halifax all ISAs which have performed well in the past and given that you can invest up to £7000 tax free they could turn into a big investment for you.

Compensations of age

Given that most older people have a bit of cash on their hands many of the banks have laid on savings accounts specifically for the over 50s. The rates on these accounts are often better than the standard accounts so are worth looking into. Abbey for example have an over 50 account which pays out 5.5%interest.

A life of savings

We all know that saving money is a good idea. Having a bit of cash stashed away means that should unexpected expenses pop up you’ll be able to meet them and by putting your money away you can plan for anticipated expenses such as holidays.

It’s important to remember however that savings are just accumulated expenditure, so have a plan for your money and enjoy spending it when the time comes.

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