Plan Your Savings

First steps to saving

Your first step should be to clear most or all of your debts as quickly as you can. Then, you should find a way of budgeting to save a little each month. To get in the savings habit, aim to put aside a day’s pay every month.

Your next savings priority should be to set up a little pot of money for emergencies in an instant access savings account. You may find it helpful to set up a standing order to your savings account on payday. You’ll transfer the money regularly before spending it, and you might not even notice it’s gone.

At a glance

Start saving by clearing your debts and setting up a standing order into a savings account
If you want to access your savings at short notice, open an instant access savings account
Save for the longer term with a fixed rate/term account
Get tax-free interest with a cash ISA

Savings in the short term

Unexpected challenges are a part of life and savings can help support you through them. Ideally, you should have enough money set aside to cover you for at least three months. Exactly how much you save will depend on your own circumstances.

There are different savings accounts. They pay different interest and have different rules for when you can take out your money. If you need quick access without fees or losing interest, go for an instant access savings account.

So, if you have some spare money at the end of the month, then you should think about starting to develop some short-term savings habits.

Develop short-term saving habits

Set up a simple, instant access savings account. Move any spare money you have at the end of the month to this account.
Set up a standing order for an amount you can afford straight after payday. Start small then build.
It's a good idea to pay any bonus or pay rise into a new or existing savings account.
Set up a budget on your spending.
Be disciplined. Set a savings goal and stick to it.

Short-term savings accounts

Cash ISAs

A cash ISA is a good option as it is a tax- efficient way to save. This is a savings account that pays interest tax-free up to specific limits. The Government introduced ISAs to encourage us to save. You receive favourable tax treatment from the Government, so you don’t have to pay tax on the interest. Tax treatment depends on your individual circumstances and may change in the future.

Stocks and shares ISAs

To save tax efficiently, you can use your ISA allowance to invest in a stocks and shares ISA. You can invest up to £20,000 annually in a stocks and shares ISA or distribute it across the four ISA types:

stocks and shares ISA
lifetime ISA (up to the lifetime ISA limit)
innovative finance ISA
cash ISA

Tax treatment depends on your individual circumstances and may change in the future.

The value of your investments and the income from them can go down as well as up and you may get back less than you originally invested.

Term deposits

Locking your money in a term deposit or savings bond can earn extra interest. Putting it in term deposits or savings bonds for higher interest rates is ideal for money you don't need to use for a while.

Once you've got into the habit of saving for the everyday, it's time to start thinking about longer-term savings.

Planning for the long term

It's good to have some savings you can instantly access in case of emergencies. But, it’s also worth thinking about saving for the future and your retirement. Putting together a savings plan now will give you greater long-term security and help put your mind at rest.

Should I save or invest

Make a will

You’re never too young to make a will. If you die without making a will, the law decides who gets what you own, not you. By sorting out your will early, you can also make sure that your loved ones don’t pay more inheritance tax than required.

Here are some tips to guide you as you start thinking about long-term plans:

Saving tax free

To make the most of your money, make sure you take advantage of your yearly tax-free savings allowance with an ISA.

Life insurance

You can help protect your family’s or dependants’ financial security by taking out life insurance. If you die or are diagnosed with a terminal illness, you could receive a lump sum to cover outstanding debts, including a mortgage. This would help repay any outstanding debts you may have, including a mortgage.

Income in retirement

More of us are now living longer, so at some point you may want to consider your income in retirement. Speak to your employer about pensions and if they’ll pay into your pension. Some will match any money you put in yourself.

Important legal information

Lloyds and Lloyds Bank are trading names of Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.

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