Managing Money In An Uncertain Economic Climate
Since the collapse of Northern Rock in September 2007, citizens in the UK have been a lot more wary of the country’s financial situation and many have started to look around to find the best way to look after their own money and to ensure their family has a secure future.
In times of an uncertain economic climate, having a fixed term savings account is a popular choice. When signing up for one of these accounts, savers agree a time period to keep their money with their bank — normally between six months and three years. No matter what the state of the economy is, this type of account will give a steady rate of interest for the duration of the agreed length of account.
Another bonus that this account offers is that until your contract is up, you cannot withdraw any of the money, meaning it is guaranteed to grow in value and the temptation to dip in to it to buy a little luxury is not an option.
An alternative is to create an account for a child. The UK government recently created the Child Trust Fund for any child born after 1 September 2002, who is a resident of the United Kingdom and is not subject to any immigration controls. At birth, the government will provide a voucher for ?250 (and an additional ?250 for children born to a low-income family) and another ?250 (or ?500 for those in a low-income family) at the age of seven.
Although there is nothing in place at the moment, there are plans to provide an extra voucher when the child reaches eleven years old, but this has yet to be confirmed. This money is put in an account and cannot be withdrawn until the child turns eighteen years old. Until then, parents and children are allowed to deposit up to ?1200 annually tax-free. The scheme was devised to help teach children about personal finance and about saving money.
Both of these options have restrictions on when money can be released and some people will need or want regular access to their money. Although interest rates can fluctuate, an Individual Savings Account (ISA) offers a favourable tax status. Some may put limits of annual deposits, but these are normally in the region of thousands of pounds.
While in recent times the UK has not been in its strongest financial position, and interest rates are lower than they have been for a while, keeping savings with a renowned bank or building society still seems to be the best option.
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Victoria Cochrane writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.
