Are Brits saving enough?

Friday, 20 January 2012 12:14
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.
 

 

Comments

blog comments powered by Disqus

Finance articles

  • Fixed-rate vs instant-access savings: are you losing out?

    With British savers losing an average of £551 million last year by not fixing the interest rate on their savings account, is it time for more people to consider the merits of moving away from instant-access products in favour of other options?

  • 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.

  • Are more people turning to offshore savings as pension confidence dips?

    A recent YouGov survey conducted in conjunction with National Savings and Investments (NS&I) revealed that less than one-third of respondents have confidence in pensions as the best savings vehicle for old age.

  • Will savings take a hit this Christmas?

    With the festive season just around the corner, many people in the UK may be wondering just how they are going to afford to pay for all the food, gifts and other expenses that Christmas brings. There are several options for consumers to consider.

  • The effect of the interest rate decision on savers

    At the beginning of October, the Bank of England's Monetary Policy Committee (MPC) decided to hold the base rate of interest at 0.5 per cent for the 32nd consecutive month, with concerns over the UK's economic recovery and high inflation driving the decision. So, what does this mean for savers?

View More Articles

Related stories

Pensions revolution ‘will kick-start savings culture’

Workplace pension changes 'will spur savers'

The introduction of pension auto-enrolment later this year should be a “watershed moment” in tackling Britain’s savings gap, a new report by the ABI suggests.

Better tax-efficient pensions awareness ‘would boost saving’

'More information needed' on tax efficient savings

A deeper understanding of tax efficient pension plans could encourage people to save more for retirement, according to a new study.

Brits withdraw savings at fastest pace for 40 years

Brits have been withdrawing savings at the fastest rate for 40 years

New figures from the Bank of England show that UK households have withdrawn over £24 billion of savings in the last year, reversing a trend that started after the financial crisis.

Bank puzzled by link between rising GDP and slow productivity

Mark Carney, the Governor of the Bank of England

The latest minutes from the Bank of England's Monetary Policy Committee show the policy makers voted unanimously to keep base rate at 0.50% and QE at £375 billion.

ONS to say Q3 GDP growth unchanged at 0.8%

UK growth is expected to be confirmed at 0.8% in Q3

Official figures released today are expected to confirm that GDP growth in the third quarter was unchanged at 0.8 per cent, the highest quarterly growth figure since Q2 2010.

Quarterly Inflation Report will update forward guidance plan

A big week ahead for the UK economy

The key economic releases in the week ahead are inflation, unemployment and retail sales and the Bank of England also publishes its latest Quarterly Inflation Report.

RBS admits decades of underinvestment cause of IT problems

Some RBS group customers were unable to complete debit card transactions yesterday

An IT issue left millions of shoppers unable to pay for items with their credit or debit on the biggest online shopping day of the year and RBS & NatWest branches open early to resolve problems.

Reading best place to live in UK for quality of life

Reading is top city for growth in the UK, says PwC

British people will be better off living in Reading, according to the new Good Growth Index by PwC and think-tank Demos

Latest Company Articles

See more Companies Directory articles


Newsletter sign up

Interests

In addition to the weekly newsletter, which areas of finance would you like to hear from us about:

Tick this box if you would like us to send you promotions from carefully selected third parties.

By signing-up you agree to the terms of use and privacy policy.

sign-up button

Get the latest information on: