Why we should all save like a Welshman

The Welsh are the UK's most diligent savers!

The Welsh have made many great contributions to British culture and way of life. Tom Jones. Nye Bevan. Welsh Rarebit (or cheese on toast as most of us would call it). 

However, I've recently discovered the Welsh have got something else to give the rest of us Brits. That is: a massive kick up the backside.... to buck up our savings habits in 2011.

A nation of savers

Two new studies have demonstrated just what a diligent nation of savers the Welsh really are. HSBC’s Savings Map of the UK found that 39% of Welsh respondents saved regularly, the highest in the UK, with those in the North West and Scotland bottom of the pile.

HSBC found that the Welsh are also the most likely to increase their savings this year, with 41% intending to ramp up how much they save in 2011.

And it’s not just the regularity with which they save, but the sums too which put the rest of us to shame. A study by Skipton Building Society found that Welsh savers put away an average of an impressive £253 a month, compared to savers in the South East who manage a paltry £132 a month.

Here’s the regional breakdown according to Skipton's research:

The Welsh are setting us all a brilliant example, which we need to start following!

How much to save?

So how do you get into the savings habit? Personally, I have to set up a direct debit so that the money leaves my account as soon as I get paid. I know what I’m like, if I leave it until later in the month, that money that should have gone into savings will end up being spent on something I don't really need.

Perhaps you tend to finish each month without anything to spare to put in savings. The truth is that most of us can find at least a little extra cash to save, just by making a few changes to our habits. Perhaps a slight change in the supermarket you use, or walking instead of driving everywhere. There are all sorts of ways that you can tweak your budgets to ensure you actually have some cash to put aside in savings each month.

Related how-to guide

Build up your savings

Here's how to get into the savings habit, find forgotten money, work out the real value of a savings rate and build up that emergency savings pot.

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For a few simple tips on how to ensure you end up with cash left over at the month's end have a read of How to budget in five simple steps. You also might find it useful to check out our online banking service, an innovative little system that allows you to see all of your money (and debts) in a single place.

Where to save it?

OK, so now you know how much you can afford to put aside each month. The next step is working out where to put it.

When you’re just starting out with saving, it’s a good idea not to put that cash too far out of reach – you never know if a big bill may appear that will require you to dip into those savings to help cover it.

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As a result, a smart place to start is with an easy access savings account.

Easy access savings

As the name suggests, an easy access savings account is one which gives you easy access to your savings! That means you don’t have to jump through hoops or have to wait a certain period before you’re allowed to get your hands on your cash.

Here are the top five easy access accounts in the market today:

*For holders of Halifax Reward current account, otherwise rate of 2.50%

I can’t pretend that any of the rates on offer there will get your heart racing, but they all offer at least a respectable return on your cash. What’s more, if you can cope with having to wait 30 days before getting access to your money, there’s a new account that you should definitely consider, again from Coventry Building Society. For a full explanation of this great notice account, have a read of New market-leading savings account.

Keeping it regular

One type of savings account that, by its very structure, gets you into the habit of saving each month is the regular saver. Regular savers generally require you to save anything from £25 to £250 a month, and in return you’ll get a brilliant rate of interest. Indeed, the current market leader allows you to earn 10% on your savings!

However, it’s not that easy to access the cash should you need to, so these accounts should be used to build up cash reserves you’re unlikely to need to lay your hands on for a while.

Saving tax-free

However, if you really want to get a decent return on your cash, at least some of the money you put aside each month should be going into an ISA. An ISA is a brilliant type of savings account, which allows you to save completely tax-free – the taxman won’t take a penny of the interest you earn on your cash.

You can save up to £10,200 in an ISA each year, though a maximum of £5,100 can be in the form of cash.

My personal favourite is the Halifax ISA Direct Reward, which pays a great rate of 3% on your money. However, there is a slight catch to be aware of. To find out more, have a read of Get the best cash ISA of the year!, while if you fancy making use of your entire ISA allowance, you should also check out The top stocks & shares ISA for 2011.

More help from lovemoney.com

For great how-to guides, explaining everything from how to cut your mortgage costs to how to make money in every room of your house, head over to our Guides section.

If you need help with a specific issue, why not see if your fellow lovemoney.com users can help by asking a question in our Q&A section?

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