The golden rules of saving
Savings fall into two broad camps: ‘buffer zone’ savings, a sensible amount put away for those unpredictable times; and ‘specific goal’ savings, when you plan to make a large purchase, such as a new car, home improvements or to go on Hajj. Whatever your reason for saving, the best time to get started is now.
The first thing to do when planning to save is to figure out exactly where you are with your finances, so that you know how much you can afford to save. Think of it as starting an exercise programme – you jump on the scales to work out your starting point and to have something to measure your progress against.
If you’re not too sure where to begin when it comes to figuring out your budget, you might want to start with the free online budget planner from the Money Advice Service. It takes you through your budget step by step and you just need to gather as much information as you can about your income and spending to get started (you will need things like bills, bank statements etc). As it’s online, you can save your information and come back to it anytime you like.
Once you understand your budget the next step is to work out areas where you could potentially save money:
• Day-to-day expenses: It’s the little things that often get forgotten in a budget, and it could be a rich source of savings. Could you save money by making a packed lunch to take to work, or by missing a coffee from an expensive high street café? Can you save money on your daily commute – perhaps by buying a travel card that would give you a discount or by walking or cycling part of the way (good for your fitness too!) or by lift sharing? These modest daily expenses can quickly mount up, so make a few changes now to ensure they’re mounting up in your savings account.
• Monthly expenses: Monthly bills can be the easiest to budget for as they’re often the same every month. Check if you’re getting the best deals on your essential services such as gas, electric, and from phone and internet providers. There are numerous money-saving websites dedicated to finding out whether you could be paying less, such as Money Saving Expert: If you can make a saving, have the saving put directly into your savings account – you won’t miss the money because you’re not used to having it.
• Annual expenses: What annual expenses do you have that could be trimmed back? Perhaps birthday or Eid presents are a significant cost – so why not plan now to save on those? There’s a lot of truth in the old saying ‘it’s the thought that counts’. For example, handmade cards, framing ‘works of art’ your children have made or making a photo album of treasured pictures all make fantastic gifts at a fraction of the cost of the high street. The issue is we’re often rushing around so much we don’t have the time to stop and think about making these things. Make this year different and plan ahead – the smiles on the faces of the gift recipients and the savings in your account will tell you that it was the right decision.
Another way to help your money grow is to make it work by putting it in an account that offers a high rate of return. Al Rayan Bank, has a range of Sharia compliant savings accounts that can help you achieve your savings goals.
Typically, the highest rates of expected return are available from our Fixed Term Deposit accounts because you agree with the Bank beforehand not to access your money for a certain period (a fixed term) of time. The rule is, the longer you can lock your money away, the more profit you will earn. To open a Fixed Term Deposit you will need at least £1,000 to invest.