Saving Guide

Understanding Savings

Ask yourself the following questions and if you answer yes then you should consider making your money work harder by simply saving.

  • Do you have any spare money sitting in your current account?
  • Are you unsure how much interest you’re earning on your savings?
  • Do you think you could save more if you changed some of your spending habits?
  • Are you hoping to treat yourself to something special in the future or save for a house, but don’t know where the money will come from?

Put your mind at rest with a savings account.

Saving is much easier when you have a particular goal in mind which keeps you motivated to stay on track. So what's your goal? To build up a deposit to buy a car, put a down-payment on a house, or to start saving for retirement? To save for that dream holiday, a wedding or simply for a rainy day?

Whatever your goal is, it's important to keep it firmly in your mind.

What is the year, month or date that you want to achieve your goal? Any idea how long it will take to save enough?

In some cases a particular goal will be time-based. For example, you may have booked to go on a holiday in two months’ time. In other cases the date may be flexible as you may not be buying a property right away.

When setting a time goal, you should make it:

  1. Realistic
  2. Achievable

Another thing you need to think about is how often you will need to save to achieve your goal. It is best practice to base the frequency of your savings on when you get paid. For example, if your salary is paid fortnightly then make sure you put some money away each time.

Once you've decided how often you can put money into your savings, you need to work out how much you can save.

Once you know what you want to save for and for how long you need to save, you'll need to work out how much to save. To achieve this you need to:

  1. Consider the savings you already have
  2. Understand how regular and how much you can save
  3. Take into account the interest earned on your savings
  4. Compare how much you need versus how much you can save. If there is a gap in the amount you need to save, ask yourself how you can achieve this.
  5. Review your budget and make a plan. To achieve your aim it's important to be realistic so make sure it’s something which can be met. 

If you are buying a property, how much is the total cost and what do you need for a deposit? Don’t forget there may be additional costs such as legal, insurance and even renovation costs to improve the property before you move in. If it's a holiday, how much are the airfares, hotels and general spending money for the trip? If you think there may be some additional unexpected costs then add another 5% or 10% to cover yourself.

Life is full of surprises. It could be an unexpected bill, an urgent car repair or a shock redundancy. Having money saved up can help you manage and give you some peace of mind. People save for many reasons but here are the 3 main ones:

  • To be covered for life’s unexpected twists and turns
  • To improve your standard of living through the earnings on savings
  • To buy that special gift that you can’t afford right now

On the other hand it’s also worth thinking about longer-term savings for your retirement. Secure your future now by establishing a savings plan and put your mind at rest.

There are two main types of bank accounts. A savings account will give you access to your savings instantly whilst a fixed term deposit may give a higher rate of return if you leave money untouched for a fixed period of time.

These accounts will offer different rates and may allow the option to accrue compound interest or get interest quarterly, half-yearly or annually.

  • Try to clear any debts as quickly as possible. This may not be very easy, but once you get rid of any outstanding payments, such as credit-card bills or utility bills, you are in a better position to reach your goals and stick to your plan.
  • Develop good habits by saving each time you get paid. Set up a standing order on payday, such as a day’s salary, so that money will be transferred on a regular basis before you’ve had the chance to spend it. Challenge yourself every month to increase this amount.
  • If you receive a bonus or a large amount of cash from an inheritance then lock the money away, warding off the temptation to spend, with a fixed term deposit
  • Create a budget on your spending and stick to it.
  • Be disciplined and persistent. Set up a realistic savings goal which you can achieve.

 

Disclaimer: This information is general advice only and does not constitute any recommendation or personal advice. It has been prepared without taking account of your objectives, financial situation or needs. You should consider obtaining personalised advice from a certified financial adviser and your accountant before making any financial decisions in relation to the matters discussed on this webpage.
This is current at the time of publication (2 May 2014), and subject to change. 

Useful Saving Tips

Saving money should be easy and fun. Once you have defined your goals and established a realistic budget, you may now start looking at ways to actually save money.

1. Debt - Clear all of it. Any interest charges you may incur on loans and credit-cards will most likely cancel out any interest you earn on your savings.

2. Budgeting - Think about where, how and why you are spending your money. You’ll realise that there are a number of occasions where you’re making unnecessary purchases. Identify those areas and cut down these expenses. Start adding this spare money to a savings account.

3. Targets – Limit yourself by setting a maximum spend in different areas such as food, transport or fuel, bills, clothing and entertainment. You'll be amazed how much you spend when you add it all up.

4. Spare Money - If you receive an extra sum of money which you didn’t expect, such as a work bonus or an inheritance, think about putting a large portion of it into your savings account, or in a long-term deposit to ward away any temptation to spend it immediately.

5. Saving habit - Adopt a savings routine by setting up a standing order for your savings account. You may instruct your bank to transfer money weekly, fortnightly or monthly. Don’t worry if it is a small amount, every Euro counts.

Do you know the interest rate on your savings account? If the answer is no, you should take the time to find out and look for a high-interest savings account. Invest some time and find the right savings account to make your money work harder for you and achieve your savings goals as quickly as possible.

  • Benefit from packages that help you save, such as telecommunication bundles or gym membership subscriptions instead of paying per session

  • Use credit responsibly

  • Shop around for a better deal on your home or car insurance

  • Bring your lunch to work

  • Cook dinner at home versus going out or buying takeaway food

  • Plan ahead by looking out for special deals or offers when travelling abroad

  • Save fuel by walking instead of driving all the time

  • Look out for deals, offers and coupons when shopping

  • Make a shopping list when buying groceries so you won’t end up buying unnecessary items

  • Look out for government schemes, for example when looking for post-graduate programmes

  • Travel during low seasons whenever possible to avoid expensive accommodation in peak seasons or sign up to newsletters to benefit from flight sales

 

Disclaimer: This information is general advice only and does not constitute any recommendation or personal advice. It has been prepared without taking account of your objectives, financial situation or needs. You should consider obtaining personalised advice from a certified financial adviser and your accountant before making any financial decisions in relation to the matters discussed on this website.
This is current at the time of publication (2 May 2014), and is subject to change. 

Saving Tips for your Children

Help your children grow up with excellent savings habits. Start now by teaching children life-lessons on how to save responsibly and ingrain good savings habits for their future.

  • To set savings goals and ward off impulse shopping
  • To encourage them to save and not to spend money they don’t have
  • To teach them to protect themselves against tough times

Good saving habits introduced early will help build responsible savings habits which will last throughout life. Forming good habits, such as savings and budgeting, will give children a head start in life.

It’s your decision whether you want to give your children pocket money and how much. If you do, pocket money will help children understand the value of money and teach them whether to spend it all straight away or save up for that special something by regular savings. You might also want to teach them the meaning of a rainy day.

You might want to encourage savings by setting a savings goal such as agreeing to match the same amount each time they save. Every Euro counts, so whether it’s their pocket money or a little helping hand from their parents and grandparents, encourage your children to start saving today.

 

Disclaimer: This information is general advice only and does not constitute any recommendation or personal advice. It has been prepared without taking account of your objectives, financial situation or needs. You should consider obtaining personalised advice from a certified financial adviser and your accountant before making any financial decisions in relation to the matters discussed on this website.
This is current at the time of publication (2 May 2014), and is subject to change.

Diversify Your Savings

The smart way to save and invest

All investments experience ups and downs, which can be triggered by events in the economy, share market, political environment and general unforeseen factors. Because many of these elements are out of your control, it may make sense to reduce your risk, especially if you are saving for retirement or already retired.

One of the main ways to do this is by diversifying your portfolio into different types of investments, and including bank deposits such as a Fixed Term Account. 

Why Fixed Term Deposits?

By diversifying your savings into a Fixed Term Deposit, you are free from the disadvantages of an asset which cannot always be easily sold or exchanged for cash without a substantial loss in value. While there are benefits to having investments in shares, mutual funds and property, there are also difficulties and drawbacks such as:

  • Picking the right investment in volatile market conditions,
  • Guaranteeing your return of original capital
  • Converting your investment into cash within an acceptable time frame.

In contrast, the main benefits of a Fixed Term Deposit are:

But isn’t my money invested for a set period?

Yes, your original deposit is invested for a set period, which you have chosen in return for a guaranteed fixed rate of income. To increase your flexibility, one option is to choose multiple terms. The example below can explain this concept in more detail.

Example 1

If your total deposit is €100,000 this may be split into five equal fixed term accounts. This way you can have a term deposit maturing every year and most importantly an opportunity to assess your current financial position and make a decision on your next investment option.

Deposit

Term Selected

Value Invested

Start Date

Maturity Date

A

1 Year

€20,000

1.1.2016

1.1.2017

B

2 Years

€20,000

1.1.2016

1.1.2018

C

3 Years

€20,000

1.1.2016

1.1.2019

D

4 Years

€20,000

1.1.2016

1.1.2020

E

5 Years

€20,000

1.1.2016

1.1.2021

As you can see from the above table you will have €20,000 maturing every year on the 1st January which will provide an opportunity to make an investment decision on whether to renew your term deposit or use your funds for another purpose. The advantage of this approach over investing the entire €100,000 into a one year term is that you will also benefit from the higher rates offered on longer terms.

 

Disclaimer: This is an illustration only and does not take into account your specific goals and circumstances. To ensure you are successful in making your money work hard for you, your FCM Customer Advisor will be able to explain the FCM Fixed Term Deposit products and how you can use it to suit your financial needs. FCM Bank does not offer advice and we recommend you seek financial planning advice from an authorised professional to support your investment decisions.

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Do you have any questions? Our team of specialists is at your service.

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