Financial savings are vitally important. Not only do they provide a way to purchase the more expensive items in life, such as a car or house, but they also provide security against the unexpected. Savings are also crucial for those who are retired, since they offer the means to go on living in the way they have become accustomed to while working.

Recent research suggests that many are not saving enough money to ensure a comfortable lifestyle post-employment. According to the findings, people need to replace 126 percent of their earnings in retirement to cover such costs as living and medical expenses, as well as inflation. In reality however, the figures show that, on average, people are only replacing 85 percent of what they earned. The study therefore highlights the fundamental need to start saving early in life.

Retirement is not the only reason to start saving early. Unplanned expenses regularly occur - usually when they are least expected and can be least afforded. Subsequently, having a nest-egg in which you have money available, can help out in those difficult situations.

Due to the exponential increase in numbers of financial institutions, the range and type of savings accounts has also significantly changed. Whereas in the past, there were basic savings accounts where people paid money into a bank account and left it there to accumulate interest, and where they often had limited access to their funds, one can now browse the financial marketplace to find a package that offers them the right access and interest rate to suit their individual needs.

There are generally two types of savings account: basic savings and money market accounts. Within each, there are a range of options to suit different needs.

Money market accounts have the advantage of offering higher interest rates, but as a rule, there has to be a higher deposit of money in the account. Additionally, there is usually a limit on the number of withdrawals one can make each month.

On the other hand, although interest rates tend to be lower on a basic savings account, it typically has a low minimum balance requirement, for example £1, and should allow for unlimited withdrawals.

Increasingly, it is preferable for people to have instant access to their savings, with the option of being able to pay as much or as little as they want to into their account. The introduction of different savings accounts also means that with the right package, people can withdraw money whenever they need to, which is great when one needs instant access to their savings.

Day to day savings are therefore a clever way to effectively store one's money securely, whilst at the same time allowing immediate access to funds. In this way, it is possible to save money for the future, whilst also allowing for the fact that unexpected expenses can come along from time to time.

Disclaimer:
This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.

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