‘Save smart’

We’re becoming increasingly good when it comes to cost cutting, according to the latest findings of an annual online survey from long-term savings and investment specialist Standard Life by YouGov PLC.

Today, more than 9 out of 10 of us (92%) actively manage our costs to make our money go further. There has been a strong growth in the number of people reviewing phone tariffs, internet tariffs and utility providers, and these days more people are looking online to find the best deals.

Controlling costs
More young people in particular have taken steps to actively control their costs in the past year. 42% more under-25s are regularly reviewing their phone and internet tariffs to save money, and 33% more are making sure they pay off their credit cards each month.
Meanwhile, 21% more people aged 55 and over report that they set themselves a weekly or monthly budget. However, as a nation, the number of people budgeting has declined by 5% this year.

Potential for higher returns
While most Britons are busy cost-cutting – buying things second hand, reviewing insurance premiums, budgeting and ensuring they get the best deals all round – those who are ‘saving smart’ by using an Individual Savings Account (ISA), either a Cash ISA (41%) or a Stocks & Shares ISA (11%), remain in the minority. Even fewer say they plan to actively save in a Cash ISA (38%) or a Stocks & Shares ISA (9%) this tax year.

From July this year, you will be able to save up to £15,000 in the New ISA, and you will also be able to transfer ISA savings freely between cash or stocks and shares. Therefore, rather than putting all of our money away in a savings account, you now have a chance to save smart with even more of your money. The higher ISA limit also increases the opportunity you have to invest in stocks and shares tax-efficiently, with the potential for higher returns than if you keep everything in cash.

Helping you ‘save smart’:
1. Use as much of your ISA allowance as possible each tax year. Between 6 April and 1 July, there are temporary limits of £5,940 for Cash and £11,880 for Stocks & Shares ISAs. After this, the new ISA (NISA) rules apply and you will have the chance of greater tax-efficient growth over the longer term by being able to invest £15,000 each tax year.

2. Always hold some money in cash to cover your outgoings (such as your rent, mortgage, food and utilities) in case of emergencies, before looking to invest for the longer term. But make sure you are getting the best interest rate on your cash by looking at both savings accounts and Cash ISAs.

3. If you are dipping your toe in the stock market for the first time, you should obtain professional advice when it comes to choosing funds for a Stocks & Shares ISA.

4. The important thing is to think about how much risk you are willing to take. You may also want to consider ‘risk-managed funds’, which have been growing in popularity with some investors. They provide you with a diversified portfolio that is managed for you, with the aim of providing the best possible return, in line with your chosen level of risk.

Tax rules and legislation can change and the information given here is based on our understanding of law and current HM Revenue & Customs practice. The value of an investment can fall or rise, so you may not receive back the amount you invested.

All figures, unless otherwise stated, are from YouGov Plc. Total sample size for the 2014 survey was 2,591 adults, 2009 adults in 2013 and 2,004 adults in 2012. Fieldwork was undertaken between 5–7 March 2014, 25–28 January 2013 and 23–27 February 2012. The surveys were carried out online. The figures have been weighted and are representative of all GB adults (aged 18+)