Are Brits saving enough?

Are Brits saving enough?

With new figures from the Centre for Economics and Business Research (Cebr) revealing this month (January) that the UK's economy has already slipped back into a recession, financial matters are likely to be at the forefront of many consumers' minds.

In addition, the Cebr has predicted that the base rate of interest in the country will remain at 0.5 per cent until 2016 - which is not the best news for savers.

With inflation high, earnings growth low or stagnant and the cost of living rising, is it any wonder that Brits are struggling to put money away?

Research published recently by first direct indicates a lack of savings could be a real problem for many Brits. According to the organisation, 28 per cent of households have less than £250 stashed away in accessible savings accounts.

Meanwhile, 32 per cent of those surveyed admitted they do not have enough cash to cover the cost of their rent or mortgage should they lose their main source of income.

Bruno Genovese, head of savings at first direct, commented: "With the current climate of uncertainty, it is of the utmost importance that families are setting aside a realistic sum of money to be used in emergencies." He added that having three months' salary in an accessible savings account is advisable.

So, if you are concerned about the state of your savings, what can you do about it and how much should you aim to set aside each month?

The first thing to do is look at all the accounts on offer and compare them to find one that suits your circumstances. Don't forget to research offshore savings accounts, as you may find these products can give you a favourable rate of interest.

Before you open your account, you should work out how much you can afford to save each month. Make a note of your income and then list all your outgoings - including your rent or mortgage payments, utility bills, food and other essential costs.

Add up all of your expenditure and deduct this from your take-home pay, as this will show you what your disposable income is. If you often find that you have little or no funds left at the end of each month, you may want to look at your lifestyle and see if there is anywhere you can cut back.

Do you often buy lunch rather than bringing your own in from home, for example? Or are there little luxuries you can do without? Being ruthless with your spending is important if you want to have a chance to save a reasonable sum regularly.

If you are not sure exactly how much you splash out each month, make a note of all your purchases over the course of four weeks and then work out which ones you are prepared to sacrifice.

Starting out with a regular saver account that does not require a substantial deposit may be a good option, as this will allow you to build up your funds slowly. If you are confident you can manage without a fixed amount every month, you could even set up a direct debit, so you don't have to remember to put money to one side.

Research published by NS&I this month found one of the best ways to remain motivated when it comes to saving is to have a particular goal in mind. The organisation revealed those who save to reach a target manage to put away 45 per cent more each month than those who don't have a specific aim.

So, it could help to sit down, decide what you want to achieve by saving and then remember this thought whenever your drive to save begins to wane.