We have three different ways of saving. The first is a separate savings account where we deposit money every month for expenses over the year. I know that we will spend a certain amount on a holiday or a private eye appointment and so I split up the cost into monthly instalments and deposit that amount into the savings account. The account earns a very low rate of interest but I know that we will have spent the money over the course of the year so that doesn't matter. The important thing is to separate off the money so that we do not think that it is available for spending for everyday expenses.
The second thing we do is to have the emergency fund money and living expenses which might be needed over the next 5 years in a higher interest savings account. Sometimes this money has been tied up in National Savings but at the moment the money, for instance for buying a new car when we need one, is in higher interest current accounts as these offer the best rates of interest but still with the money easily available.
The final sets of savings are in investment ISAs which are index-linked to the stock market. We also have some money in private pension schemes leftover from some of the employers we have worked for. At the moment these investments are doing very well, up by over 10% since the summer. We know that this rate cannot last but are happy to see our little bit of money continue to grow until we retire in about 15 years time.
At present our other savings look like we will be able to have me study and MrShoestring choose his employment by the Summer and that idea of free choice is very encouraging when you are thinking about spending something. The choice is for a physical item now or more time to do what you want later and we almost always plump for freedom to choose !