Comprehensive financial planning not only addresses day to day spending requirements, but effective money management also accounts for future needs. That means savings play a crucial role in your personal finances. As import as it is to put by cash for the future, household savings often lag, as UK families address other pressing financial obligations. A government scheme could help some of the families that most need assistance setting aside cash.
Saving Money Reinforces Financial Health
Personal savings serve several functions for UK families, but too many UK households are short on reserves. Among other benefits, building savings can help with these financial challenges:
Redundancy and Underemployment – Employment challenges can put a strain on family finances. Holding adequate savings in reserve can help you overcome short-term work interruptions and extended periods of underemployment. Experts recommend setting by at least a few months’ worth of expenses – ideally enough to cover six months’ outgoings.
Unexpected Expenses – Spending takes many forms, but the most troubling expenses are unexpected demands for which there’s no time to prepare. Without savings in reserve, even a small unanticipated expense can snowball into a state of financial distress. In a pinch, short-term loans can help you resolve cash flow shortfalls. Issued without formal credit checks, payday loans furnish access to fast cash from reputable providers. The money must be repaid promptly, but this type of loan may provide the solution you’re looking for when unexpected expenses arise.
Medical Emergencies – Nothing is more important than your health, but funding medical emergencies can leave you short. A rainy day account can help ease the burden, providing financial back-up when it’s most needed. Your savings can help pay for care that’s not covered and if you miss work while recuperating from an ailment or procedure, personal savings can help bridge the financial gap, until you return to work.
Car Repairs – Motoring costs are substantial, and spending doesn’t end with the purchase price of your car. On the contrary, insurance and other expenses push motoring costs higher. And unless you’re fortunate enough to drive a brand new car off the lot, repair bills represent another regular cost of staying on the motorway. Money you set aside can be used to pay for routine car maintenance, and financial reserves are particularly useful when your car unexpectedly breaks down, needing repair.
Education – Whether you need to go back to school, or your child’s approaching college age, personal savings can be earmarked for education. If you have plenty of time to plan, a dedicated college fund is best, in addition to your customary savings. However, if college costs are imminent, and you’re not prepared with college cash; your general savings account can be a life-saver, covering education expenses.
With so many good reasons to save, there’s no time to delay. Easier said than done? One new government program may be just the thing you need to make progress putting by savings. The Help to Save scheme is a government initiative aimed at increasing savings among UK families. The effort, focused on working, low income residents is designed to facilitate savings and help families build financial reserves for the future.
The terms of the scheme are straightforward. Eligible participants can save up to £50 monthly, into their Help to Save accounts. After saving for two years, savers qualify for a bonus match from the government, worth 50 per cent of the highest balance reached. Those who choose to continue saving for an additional two years are again eligible to earn the 50 per cent bonus. At the end of the four year period, savers who’ve made maximum deposits, totaling £2,400 would each take home bonuses worth £1,200.
The promising scheme is relatively new, rolled out for testing in January of this year. If you are entitled to Working Tax Credit and currently receive WTC payments or Child Tax Credit payments, you’re eligible to participate in the Help to Save scheme.
Effective household money managers must not only cover daily spending demands, but also plan for future expenses. Help to Save, a government program currently in a trial phase, helps working families overcome saving difficulties. The generous initiative may prove invaluable to Britons struggling with inadequate savings.