Charter Savings Bank won the Best Fixed Term Savings Account Provider category at the YourMoney.com Personal Finance Awards 2024 – the fifth time it has scooped a cash savings-related title in the years since 2016.
As part of YourMoney.com‘s special award winner spotlight series, Louise Halliwell, group savings director, savings proposition at Charter Savings Bank shares five reasons to save cash for the long term.
Five reasons to save cash for the long term
While some of us like to save for short-term goals for things we know might be coming in the near future, others like to look further ahead.
From having an emergency fund for unexpected expenses through to planning for retirement and being able to provide for loved ones, here are reasons why you might want to lock your money away for longer, and what options there are to help you.
1) Planning for the unexpected
If the last few years have taught us anything, it’s that we need to be prepared for the unexpected things that life might throw at us. You don’t know what’s just around the corner.
From negative curveballs (such as redundancy, falling ill or repairs to our car or home) to more positive things such as weddings, children, grandchildren or early retirement, you need to be ready with backup savings just in case.
It’s usually a rule of thumb to have at least three to six months’ worth of outgoings in savings to ensure you’re covered, but many of us like to have more than this for peace of mind should the unexpected happen.
2) Financial security
Investing in your future and building your wealth over time is something we’d all love to achieve. We all have financial goals and want to live comfortably. Choosing to put away a certain amount of our money over time means extra money to fall back on should you need it.
You may decide to change your career or reduce your working hours. You may want to take up a new hobby or invest in property. You may just want to be financially secure.
If you choose a savings account that pays interest monthly, then you can use this as extra regular income as well, rather than having it paid back into your savings as a lump sum at the end of each year.
3) Retirement
Paying into a pension is a good way to save for retirement and some of us are lucky enough to have a generous workplace pension scheme, but you might also want to supplement this with private savings.
We work hard for the majority of our adult life, so we want a comfortable life when we retire. You may want to travel, go on a cruise, spend time with loved ones, or buy the motorbike you’ve always dreamed of.
Or you might just want to ensure that you have enough money to be comfortable and the peace of mind to know you have enough to live on without regular wages coming in.
You may even be able to retire earlier than planned if you’ve been really careful with your savings, or started saving early.
4) Providing for loved ones
The majority of us love to spoil those we’re close to. We want to make sure we have enough extra money to do this once we’ve taken care of our needs.
If you’re lucky enough to have children or grandchildren, you may want to keep money aside to put towards their university education, help them to get on the housing ladder, possibly keep a fund for weddings or buy them their first car.
But, as we get older, there’s also a need to ensure that our loved ones aren’t left out of pocket should we pass away unexpectedly, so you’ll want to ensure your debts are paid off and your funeral costs are covered.
5) Big purchases
Instead of getting into debt, taking out a loan or making a big purchase on a credit card with a huge interest fee, a sensible option would be to put away a certain amount per month for a longer period of time.
Then you know exactly how much you would earn in interest, and can budget for those big-ticket items guilt-free. A new house, car, home renovations, weddings or once-in-a-lifetime holidays – all these are things that need a savings plan and a long-term investment.
How can I save for the long term?
A fixed rate account could be the best option if you’re looking to lock your money away for a longer time. There are a few benefits, including:
- Generally a higher rate of interest the longer the term
- Peace of mind of a fixed rate for the term – so it won’t be affected by rising or falling interest rates or other changes
- With most accounts, you won’t be able to easily withdraw funds without a penalty, meaning you’re less likely to be tempted to take out your money
If you are looking to lock your savings away, why not take a look at the latest accounts from Charter Savings Bank?
Louise Halliwell is group savings director, savings proposition at Charter Savings Bank
Charter Savings Bank is a retail savings bank, offering UK customers online savings accounts, cash ISAs and bonds. It offers a simple and straightforward way to save, with competitive interest rates supported by excellent service.
