From getting ahead with your mortgage, to paying into a pension or buying Premium Bonds, here’s our run-down of some of the options you if you’ve got £100 a month to put away…
1. Use your cash ISA allowance
You can invest up to £15,000 this tax year in a tax-free individual savings account (ISA) – and the taxman won’t be able to get his hands on your returns.
You can earn 1.65% if from Teachers Building Society Cash ISA Notice 90 (Issue 4) account, which can be opened with £100. You must give 90 days’ notice if you want to make a withdrawal.
2. Make regular savings
If you’re keen to start the savings habit, a regular savings account is a good place to start, as you must commit to pay in a set amount £25 up to £250 a month. These accounts typically have a 12-month term, during which time you can’t get at your money.
The best accounts often require you to have a current account with the same provider. For example, First Direct’s Regular Saver account pays an annual equivalent rate (AER) of to its 1st current account customers who can put away between £25 and £300 a month.
If you don’t want to change your current account, Kent Reliance offers 4% if you put away between £25 and £500 a month.
3. Deposit into your current account
You can often earn more from your current account than you can from savings accounts, so you could pay and extra £100 into your current account each month.
TSB’s Plus current account, for example, pays you 5% interest on balances up to £2,000. You must pay in £500 a month to qualify.
Halifax’s Reward account pays you £5 a month, as long as you pay in £750 a month, stay in credit and pay two different direct debits.
4. Earn credit card cashback
You could use a credit card to earn cashback on £100 of spending each month and then use your spare £100 to clear the balance in full to avoid interest charges.
Check out the top 5 cards with Jessica Bown’s article.
5. Get ahead on your energy bills
Energy bills can rocket in winter months, so you might want to think about over-paying in summer months when your energy usage is low. You’ll then have a surplus to put towards your winter bills.
If you pay by monthly direct debit, you may be over-paying already, so check with your energy supplier to see if there’s already any extra in your account.
6. Overpay on your mortgage
Rather than earning low returns by stashing your cash in a savings account, overpaying your mortgage could knock thousands of pounds off your overall interest payments. Most lenders will allow you to pay an extra 10% a year without incurring a penalty.
According to MoneySuperMarket’s partner broker, London and Country, someone with a £150,000 25-year repayment mortgage who is overpaying by £100 a month would save £19,654 over the lifetime of their mortgage - and reduce the term by six years and two months.
7. Pay into a pension
If you’ve already got some savings in place, you could put your £100 a month towards your long term financial future.
You get tax relief on any pension contributions you make, so if you are basic rate taxpayer, you save 20p in tax for every pound you pay in. This rises to 40p in tax for every pound you contribute it you are a higher rate taxpayer and 45p if you’re an additional rate taxpayer.
8. Buy Premium Bonds
If you want the chance every month to win £1m and other tax-free prizes, you could set up a standing order to invest £100 in NS&I Premium Bonds each month.
Your capital isn’t at risk, but you must be prepared to accept the risk you might not win any prizes. The maximum amount you can invest in Premium Bonds is £40,000. Find out more here.
9. Invest in the stockmarket
If you haven’t invested your full £15,000 ISA allowance in cash, you might want to think about dipping a toe in the stockmarket and investing in a stocks and shares ISA too.
Saving monthly reduces risks as you buy more shares when prices are low and fewer when they are higher. Most providers allow you to invest from £25 a month.
10. Be ready for Christmas 2015
Imagine is the cost of Christmas was not even a slight concern? Put aside £100 a month during next year and it won’t be - £1,200 plus a little bit of interest – will do you nicely.
Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.