5 Top Questions about Saving

    Saving is a crucial part of financial planning and it is an area that we receive a variety of questions about. Here Anne O’Doherty looks at the top 5 questions about savings that we frequently receive from clients and the answers we guide them through

    What is the difference between investing and saving?

    Saving and investing are two different ways to handle your money. Saving is generally when you put a set amount of money aside on a regular basis for a particular period of time. Savings tend to be low risk, easily accessible and shorter term. Investing on the other hand is the term generally used when you have a lump sum that you can put away for a medium to long term. It is more geared towards wealth accumulation and achieving longer term financial goals.

    How do I decide how much to save?

    One of the most common questions we are asked is how much an individual should save each month. The answer often depends on an person’s financial situation and their goals. A general rule of thumb is to follow the 50/30/20 rule. This means allocating 50% of your income to necessities, 30% to discretionary spending, and 20% to savings and debt repayment. This 20% can be further divided into short-term savings, like an emergency fund, and long-term goals, such as retirement. This will of course vary depending on a person’s financial priorities.

    Should I pay off debt before starting to save?

    This is a common question especially with clients who may have high-interest debt. While we would always suggest prioritising paying off high-interest debt, we do also believe that it is important to have some money put aside that is easily accessible, in case of emergencies.  We all know how unpredictable life can be and a financial plan should include provision for an emergency fund to avoid accumulating debt should unforeseen circumstances arise. It is possible to balance debt repayment and savings by allocating a portion of your budget to both simultaneously.

    What is an emergency fund?

    An emergency fund is a financial safety net and is essential for handling unexpected expenses. Having savings of 3 to 6 month’s worth of living expenses put aside is a good goal. This can be done over a period of time by starting small, making this goal more achievable. Simply setting up an automatic payment to your chosen savings account can ensure that this happens.

    What should I take into consideration when choosing a savings account?

    There are lots of variables to consider when choosing the right account for you. The answer depends on your own specific circumstances and you need to take into account things like what your goal is, how much you will be putting aside, how long you will be doing this, how quickly you may want to be able to access the funds and of course your attitude to risk. You also don’t have to pick just one product. You may have more than one goal and find that mixing products is the best option for you.

    Whether you’re just starting out with your savings journey or would like to ensure you’re on the right path, we’re here to help you. Discussing your savings and understanding the various options available to you is a critical part of any financial plan. We’ll work with you to understand how much to save, where to save, building an emergency fund, managing savings on a tight budget, and balancing debt repayment with saving can empower individuals to take control of their financial future.

    Building your savings can be simple and an effective way to achieve your longer term financial goals. We’re here to help with all your questions about saving. So if you’d like to take a closer look at saving and what kind of plan is right for your circumstances, just get in touch with us at Quintas Wealth Management, because we know what counts.

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