Save first, then spend

Q I've set up a savings account but I seem to be dipping into it at regular intervals. What can I do differently?

A Spend a few moments reviewing the circumstances under which you're drawing money out of your savings account. If you're taking money out to help you cover day-to-day expenses, then it's possible that you haven't psychologically adjusted to the fact that your savings should be 'untouchable' except in extreme circumstances. Have another look at your areas of discretionary spend; if you conclude that it's realistic to save something each month, then you'll need to discipline yourself not to touch your savings unless the circumstances are right.

Q I'm getting confused by the fact that there are so many different ways to save. What's the best?

A It's a matter of knowing why you are saving. If you are saving for an event that'll take place in the next couple of years, then you are better off with a cash-based investment. If, however, your children are still at school but you know that they will be heading to university in five years, then it's a good idea to consider investing for growth in the stock market.

Top tip

Set up a standing order from your current to your savings account, and make sure it goes out early in the month. (Wait until the end and you may well find that you've no money left.) Make it a reasonable amount but critically one that you can afford. To help avoid any temptation to dip into your savings, set up the savings account so that the money you've saved isn't too readily accessible. Use the building society across town rather than the one around the corner, and consider going for an account where you have to give notice before you can make a withdrawal.