Kiran Trivedi Explains Why it pays to Start Saving Early

Even with all the money saving tips in the world, there’s no substitute for saving, and this week on the KiranTrivedi blog, I want to explain why you need to start saving early.

The Plight of the Young Professional

As a 20-something young professional with a good career and a steady stream of disposable income, it often seems as though you’ve got the world at your feet. You’ve got money, you’ve got time and you’ve got an established career path.

That’s why so many of these people don’t save their money. They think, ‘I’ll have plenty of time in the future, my money’s not going anywhere so I’ll start saving in my thirties.’

Retirement- It’s Kind of Expensive!

I understand this point of view, I really do, but the truth is that you’ve got it all wrong. You need to start saving in your twenties. Quite frankly, the earlier the better.

Why, I hear you ask? Well it’s all about preparing for your future. Even though it seems really far away, your retirement will arrive far quicker than you could ever possibly imagine – only 40 years or so – and young people often underestimate how much money they really need to comfortably see out their golden years. Little clue for you – it’s a lot!

Kiran Trivedi Makes His Pitch: Start Saving Earlier!

Alright, fair enough, retirement is kind of expensive. So now I hear you ask, ‘why can’t I just wait until I’m in my mid-30’s when I’m earning more and start saving then?

Basically when you save, you make interest, then you make interest on your interest, known as compound interest, which means the longer you save, the more money you make. Therefore, if you save a little money each month from your early 20’s you stand to have more in the bank by the time you hit the retirement home, than you would if you started saving later.

Furthermore, it’s actually way better for your personal finances across the board. Saving a little bit every month for 40 years leaves you with far more to live off and gives you a better quality of life, than saving a larger amount for 30 years. Can’t say fairer than that, Kiran Trivedi readers!

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ISA: You Really Need One

With the budget still fresh in all our minds, Kiran Trivedi readers, I want to hone in this week on ISA’s. You really need one. What are they and how can you use them to add a little extra to your budget in the long term?

There are so many financial products out there that promise great returns on your savings that sometimes you don’t even know how to begin to wade through the information to find the best option for you. The ISA is that option.

An ISA is an Individual Savings Account and they’ve actually been around a whole lot longer than you might think; 15 years. It’s an account that you can use to make a wad of cash on your earnings. So how can you actually do this?

Well, when the government first introduced ISA’s to the nation 15 years ago, they billed them as a way you can make money on your savings tax free. That’s what it still is today. You put money into your ISA account and the savings you make, based on interest rates, don’t get taxed.

It really is that simple, however there were a few caveats. Until the most recent budget, you could only put up to roughly £5,760 in per year. You also had to have cash and shares ISA options. You did have to pay some tax on your shares ISA.

However this new budget has brought some real changes. The limit of money that you can put into your ISA account has now been raised to £15,000 a year and you are now allowed to get rid of the shares option and just go with cash! So you really can make a bundle on savings!

Now we know that you can use it to make money, we need to know who is eligible to open an ISA. Well, pretty much everybody, as long as you have money to put into the account. According to the government guidelines, anyone over the age of 18 can open a cash ISA as long as they are a UK resident. You can even get a version for kids called a junior ISA.

So what does this mean for your personal finances? Well it means you can take your hard earned savings, put them into an account and if you wait a while, you can make hundreds, even thousands of pounds that you can then use to give you and your family a better quality of life.

This is why you really need an ISA, Kiran Trivedi readers. It’s a really simple way of making money, money that you can then use in any way you want. 

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