‘Crucial’ amount to have in your savings

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The new year is the perfect time to get your finances in order and start making a savings plan is a great place to start. Shaq Magee is the co-founder of Millennial Money UK, a community-led platform aimed at demystifying personal finance topics. So far, the brand has amassed 24K followers on its Instagram page and is continuing to grow its Youtube offering (Youtube.com/MillenialmoneyUK).

Speaking to Express.co.uk, Shaq recommended cumulating a small pot of money and gradually building it up, prioritising an emergency savings fund before you start saving for anything else.

He said: “It’s crucial to establish an emergency cash fund to protect against any unforeseen costs. We recommend saving between three- and six months’ worth of your minimum monthly expenditure.”

He continued: “If this amount seems daunting, try building up to one month at a time. It’s important this money is kept in an account that is easily accessible in case you need to access it quickly to pay for unexpected costs that can often crop up.”

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Instant access accounts are the best option for withdrawing money fast. They allow you to withdraw money in the same way you would from a current account. This means they will not incur a charge or penalty.

You will be able to withdraw money electronically and transfer it to another account, or withdraw money from a cash machine. Alternatively, some easy-access accounts may have a short waiting period before you can take out money.

You may also be limited on how many withdrawals you can make each year. Much like an instant account, you can typically transfer the money from your easy-access savings account to your current account.

Most accounts will also allow you to earn a set amount of interest on your savings, but these rates will be variable.  “If you’re setting aside money for your rainy-day, fund, you’ll need a readily accessible savings account,” said Shaq. “If you’re opening a saver’s account to start an emergency fund, be sure to check how long it may take to withdraw money – you don’t want to be caught short in an emergency.

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“With inflation at an all-time high, even the best saving accounts have the potential to erode the value of your hard-earned money, reducing its value over time.”

If you want to start the new year by setting up a long-term savings account, Shaq says the interest rate is crucial. “Once you have this emergency buffer set up, it’s then worth thinking about your longer-term savings.

“If you’re saving for a longer-term goal, like your forever home, child’s future, or retirement, you may wish to consider investing some of your savings to help your money retain its value,” he said.

“In addition, investing money in funds with a commitment to sustainability can bring added benefits, knowing that your money is being invested to help drive positive change for the environment and society.”

Five best easy-access savings accounts right now

Money Saving Expert lists their top recommended easy-access savings accounts on its website based on interest rates.

They explained: “Zopa pays the top rate of 2.86 percent, though it’s app-only. For an online account, Coventry BS pays a smidgeon less at 2.85 percent, though limits you to six penalty-free withdrawals per year, and Cynergy Bank pays 2.75 percent with unlimited withdrawals (minimum of £1).”

Alternatively, if you prefer to keep your money with a highstreet bank, the MSE team recommend Nationwide, which offers aa 2.5 percent rate AER variable. There is a minimum deposit of £1 and a maximum deposit of £5million. However, you are limited to three withdrawals a year or the interest rate drops to 0.75 percent.

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