Question:
Howzit Sbu! I'd like to know what the best way is to save for: a) The upcoming December holidays; b) A deposit on a flat (I haven't got any savings and would have to start from scratch); c) Retirement (I'm 31, but have no retirement savings thus far).

I guess what I'm asking is your advice on saving for the short, medium and long term.

Answer:
Starting to save, be it for the short, medium or long term, is a step in the right direction towards financial control (click here for the easiest way to start saving). While the world grapples with the effects of the recession, smart consumers are doing the right thing by settling all their debt and starting a 'rainy day' (click here for advice on starting your own 'rainy day' fund) fund to give them peace of mind about their ability to handle unexpected expenses. Once you?ve decided to save, take a look at your current spending patterns. Write down a detailed list of all your expenses and see where you are able to reduce your spending to free up cash. Once you have a monthly amount in mind (that you can afford to save!) tackle your short, medium and long-term goals.

Short-term view

If you need flexibility, choose a savings account that gives you immediate access to your money should an emergency arise.

You could look at a savings plan or money market fund. On the other hand, if you?re saving towards a goal ? like a December holiday or a deposit on a flat ? consider a fixed-term savings plan. You choose the term ? anything between six and 12 months or even longer ? and the amount you deposit into the account. The interest rate ? currently 8.5 percent at some banks ? will then stay fixed for the duration of the term.

Call accounts with 32-day notice periods and five-year savings policies could also be options, though the funds will not be as easily accessible.

Long-term view

Saving towards your retirement is crucial if you want to retire comfortably. And the earlier you start the better. As the investment is for the long term you could opt for a savings product with a higher risk factor and higher potential payouts such as unit trust funds.

These products are ideal if you have difficulty sticking to a savings plan, because it limits the access to your money. Bear in mind the longer your term the smaller your monthly amounts need to be to reach your target amount. On the other hand, the shorter your term the bigger your monthly amounts will need to be.

Talk to an accredited financial advisor who will be able to discuss the options with you and look out for the best interest rates and review all the costs related to your savings product to confirm what the net return on your savings will be.