Get Prepared For ISA season Now
Whether it’s dealing with the rising cost of the weekly shop, the repayments on bad credit credit cards or attempting not to wince every time the cost of petrol goes up at the pump, it’s fair to say that most of us are dealing with fairly tight financial realities.
Since the credit crunch in 2008 and the resulting recession, most households are struggling with a toxic combination of debt (caused by poorly regulated lending, high levels of personal debt on products such as bad credit credit cards), rising inflation and increasing unemployment.
It’s Harder to Save Now
Suddenly the prospect of saving seems more difficult than ever, particularly with interest rates at an incredible low and generally not even keeping up with inflation.
However, the new ISA season is coming and there are a number of good reasons to prepare properly for it.
Firstly, everyone needs a nest egg for emergencies. Conventional wisdom suggests that as a minimum, people should have between 6 and 12 months worth of savings to cover emergencies, mortgage or rent payments and living costs in case of accident, sickness or unemployment.
An ISA is the perfect vehicle in which to store savings, as it is tax free. Every year, each individual gets a tax-free ISA allowance which can be held in a mix of cash and stocks and shares, or just in cash. It’s one of the few savings vehicles where the government can’t get its hands on any interest that you earn.
The new ISA year starts with the financial year too, in April, so there’s time to begin building a nest egg now that you can transfer into your new ISA as a lump sum in April.
The trick with saving is to get into the habit of doing it little and often. When saving up large sums seems too disheartening or even impossible, simply putting away a small portion of income each month can seem more achievable and will quickly add up.
There are even regular-saver ISAs which start at just £25 a month and most people will find that with a careful budget and some changes in spending habits they can find a little extra to squirrel away.
If you get an online ISA, you can track and manage your savings each month and perhaps find a non-monetary way to reward yourself for a good effort! Over time you’ll find that you can rely less on emergency fixes such as overdrafts and just dip into your savings for any emergencies.
Finding an ISA
Look on price comparison sites to find the latest ISA rates. These change regularly and are otherwise difficult to keep up with. Newspapers also carry regularly updated information on the best offers.
If you are starting a new ISA for the fresh financial year, look for one you can manage easily, either by phone, online or in-branch.
Remember that once you take money out of your ISA, you can’t put it back in for that year, so view your ISA as a longer-term savings vehicle or strictly for emergencies.