21 August 2010

Raiding Savings - Good News

Almost a third of adults have raided savings in the past year to cover income shortfalls, according to investment firm Schroders (quoted by the BBC: http://www.bbc.co.uk/news/business-11039316).

Obviously it's not good to have an income shortfall, but given that "life happens" it's much better to have thought ahead and accumulated some savings than to cover an income shortfall with borrowing! And let's face it, there is little incentive to keep money in savings accounts at the moment.

The key thing is to have the strategy to accumulate savings in the first place. A quarter to a third of your annual income set aside and easily available is a good rule of thumb - perhaps up to a half if your income is less certain (self-employed perhaps?) or outgoings are very "lumpy".

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