Just because you’re saving money doesn’t mean you have nothing to worry about. Banks, after call, can still collapse no matter how steady the economy may seem today. Rather than wait for your bank to head this way, it’s best to take precautionary measures starting with the facts.
What You Need to Know
There are a few things you need to know and keep in mind when saving money through a bank. One is the fact that not all UK savings are regulated meaning protection for your money can be tricky and thus requires a bit of research on your part.
For UK regulated banks, protection is set at £85,000. If the bank collapses, that doesn’t mean you get £85,000 per account. It only means £85,000 per financial institution. If you have a joint account with your spouse, the protection is double the £85,000 which means you and your spouse get a total of £170,000.
How to Keep Your Money Safe
While protection for UK-regulated banks is only up to £85,000, it doesn’t mean that you shouldn’t save more than that. You can still as much as want while keeping your money 100% safe by doing the following steps below:
Spread your savings
If diversification works with investing so does spreading your savings. Don’t put all your money in one bank as a way to reduce risks. If you have savings more that the protection of £85,000, for example, you should avoid putting it all in one bank or in any one financial institution.
Research different institutions
You might think opening different accounts in different banks is a good strategy. It does work sometimes but not always. Remember that the protection stated specifically that its only £85,000 per institution. This means that you need to research separate institutions accordingly then open one account per institution to avail the maximum protection per account.
Use savings to pay off debt
Other than keeping your money on savings accounts, you can keep your money safe by using the excess of the £85,000 protection to pay off debt if you have any. Start by paying off credit cards and loans with high interest rates. By paying off debt, no money goes to waste especially as soon as all the debts are paid off.
Fast track your mortgage payments
If you’re paying mortgage, you can pay more than your monthly dues to fast track the process. Use your excess savings to chip off more off your mortgage each month. By paying more, it’s just like earning cash as you reduce the amount you owe therefore reducing the interest in the process.
Invest in other mediums
If you’re not the type to take high risks on your investments, it’s time to do so. You need to get out of your comfort zone and start going beyond savings. There are more ways to save money. Investment is one and you also get to earn high interest in the process. Just like with your savings, don’t put all your eggs in one basket. Diversification is one strategy that will help mitigate risks while keeping your money safe.