Interest rates remain at historically low levels in the UK. Still, a large number of Brits have chosen to boost their savings during the coronavirus lockdowns.
According to the Bank of England’s Monetary Policy Report, British households have saved £125 billion throughout the pandemic. That’s a stunning average of £5,000 per household.
This is a big change from just a year ago when half of Brits confessed to having no savings pre-Pandemic.
How Brits focused on savings during the pandemic
Building on the Bank of England’s information, savings and retirement firm Aviva engaged the help of Censuswide to look into things more closely. They surveyed over 2,000 UK savers to shed some light on how their saving habits have changed.
Roger Marsden, Managing Director, Retail Savings and Retirement at Aviva explains, “Our own research showed that more than half (57%) of people took action in relation to their savings during the last lockdown.
“During these uncertain times, they want to make sure their finances and savings can meet their longer-term goals, as well as their more immediate needs. Lockdown has meant lifestyle and spending habits have changed, and they will continue to change throughout 2021.
“It is more important than ever that customers take a broader view of their finances and their savings, and shop around for the best option to meet their needs.”
How to boost your savings
Despite the current low-interest rate, the Bank of England expects that Brits will continue adding to their savings in 2021. And for those who continue to save, Marsden says it’s important to choose options to have their money work as hard as possible.
Aviva’s partner, Raisin UK, which offers a one-stop-shop for online savings, is addressing the lack of savings options by offering customers a selection of fixed-term savings accounts with a number of banks.
“In December, flows into deposit accounts within the UK savings market rose to £20.9 billion, an increase from an already high £18.4 billion in November,” says Katharina Lueth, VP of Europe for Raisin and Chairwoman of Raisin UK. “As a result, the Bank of England estimates that there is almost £1.6 trillion in household cash deposits.” Of that, £225 billion sits in non-interest bearing deposits.
The solution? You shouldn’t be afraid to boost your savings by taking advantage of the best rates on the market. For example, Aviva Save allows you to compare a number of fixed-term accounts to find the right fit for you.
What to do with those new savings
If you don’t have an emergency fund set up, that’s perhaps the most important reason to boost your savings. At the outbreak of the pandemic, almost 50% of Brits had to use their savings to cope with coronavirus-related expenses. Without an emergency fund in place, they would have ended up in debt.
If you need help getting started, set up a budget to see where your money is going. You can also try a savings challenge or automate your savings. This allows you to set a small amount of money aside from every paycheck without even thinking about it.