Start Saving For An Insolvency-Free Christmas
Christmas savings clubs are an "excellent" way to ensure a happy holiday season providing they are "solid", an independent financial adviser said today.
Richard Sheppard, head of pensions at AWD Chase de Vere, said the majority of people announced their intention to save and never acted on it.
He said that the collapse of the Farepak Hamper firm in October 2006, which cost savers up to £2,000, had dented consumer faith in organised festive savings.
Farepak went bust after lending £33 million to its parent company European Home Retail #150; a sum which was never paid back.
"Despite the reassurances that we had via all forms of media, I think confidence is low," Mr Sheppard said.
"Until we see people losing money in a building society that will certainly be the preferred route.
"The only advantage that savings clubs have is of course that it's one stage removed, so access to the money is that much more difficult."
Mr Sheppard also said that the schemes are convenient because they enable people to save small amounts and gradually build up their gift fund.
The financial expert revealed that the incidence of insolvencies peaked in February and March - just after the financially bruising season of goodwill.
He said that too many people failed to achieve their savings ambitions.
"Every year #133; the clients that I come across say that it's never going to happen again, and they're going to start saving straight away, but spending always exceeds savings."
Mr Sheppard advised against keeping savings in the home and thus losing out on interest payments and creating a security risk.
He added: "[Will] you remember which tin it's in? I know I wouldn't. I would spend it."
Instead, those looking ahead should set up a direct debit now, ensuring that the savings are put in a separate account, he said.
Source: themotleyfool.co.uk
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