Ask Janet: Banking questions

I am young and single and want to start saving; what are my options?

The savings account you choose will be dependant on your financial goals, both long and short term. Once you have determined how much money you are able to put aside, this will generally impact the type of account you choose. First you should spend some time to determine what you expect from your savings account and how you want to save – do you prefer to put money aside each month, save some extra cash when you can, or put a lump sum away?

There are accounts which can be opened with minimum amount of money, while to open others you will need to save monthly or deposit a lump sum. It’s a good idea to shop around and find out how much money you need to open a regular savings account and what interest rates are available.

Once you have worked out how much you can reasonably afford to save this will be the deciding factor for the account that will work best for you.

You should always remember that savings accounts are interest bearing and the best way to build up savings is to leave your money untouched for as long as you can while continuing to deposit on a regular basis – in the long run even small regular payments will soon add up.

Generally you will also need to consider whether you would like an account where the interest is paid monthly or annually and also if it has a variable or fixed rate of interest. Always keep in mind that a variable rate can go down as well as up. After you have been able to save for awhile you should speak with your bank representative to see whether your personal circumstances now enable you to gain access to specialist accounts which pay better rates.

I have been in debt for the last eight months; what is the best way to start consolidating my debts?

It isn’t easy to pull yourself out of debt denial, but it’s an incredibly worthwhile step.

The first step in eliminating debt is to figure out where your money goes. This will enable you to see where your debt is coming from and, perhaps, help you to identify where you may be able to hold on to extra cash to put toward your debts. It may be a good idea to track your expenses for a month or two. This will allow you to see how much you are spending on essential (mortgage, utilities, etc) type bills and also on nonessential bills such as entertainment, eating out, etc. You may find that something as simple as bringing lunch to work can help keep extra money in your pocket which, in turn, can be put towards clearing off your debt.

You should then organize your debt in order of priority. For example, organize your credit cards from those that have the highest APR to those that have the lowest. Start paying extra on the highest and make the regular payments on the others. Once you have paid off the first start paying extra on the next in line.

Also you should remember that ridding yourself of debt is no good unless you also rid yourself of the behaviors and thought processes that got you there. Whatever mistakes you feel you have made in the past, remind yourself that you are now moving forward. Think positively, and seek help if you feel you need it.

Janet James is the Manager of Sales and Customer Service at Fidelity. Janet is a 21-year veteran in the banking industry with accreditations and comprehensive experience in customer service management, Mutual Funds, SPVs and corporate administration experience. She can be reached for questions at 949-7822 ext. 2215 or at [email protected] .

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