New research by debt management company Lowell shows that almost a quarter of Brits (24%) put no money at all towards savings on a monthly basis.
John Pears, UK CEO of Lowell, explains: “Unfortunately, this research confirms that many people across the UK are caught in the trap of living from payday to payday. This can be a slippery slope into unmanageable debt if your circumstances were to change unexpectedly.”
Brits’ saving habits leave much to be desired
Lowell’s research shows that the lack of good saving habits is more obvious in some cities. In Plymouth, 34% of people don’t save anything at all. And over 30% of Birmingham and Sheffield residents don’t save money either.
But if the recent crisis has shown us anything, is that an emergency fund is essential to deal with unexpected circumstances. Still, according to International Adviser, 51% of UK adults do not have enough emergency savings to protect themselves in a crisis.
Why Brits aren’t saving more
Simply put, Brits aren’t saving because they’re spending most of their money very quickly. For example, West Yorkshire residents spend 51% of their wages within the first week after payday. Norwich residents are close behind at 49%. Even the slower spenders, like Brighton residents, still spend 39% of their wages within the first week of being paid.
According to Pears, this research confirms that many people across the UK are struggling to keep track of where their money is going each month. And Pears points out that until you get your finances back under control and avoid accidental overspending, you’re at risk of a financial emergency.
How to start saving
Getting started might feel challenging, but it doesn’t have to be. Here are some tips to help you take the first steps.
Don’t wait until you have hundreds of pounds to put aside to start saving. Saving just £2 a day will put £730 into your savings account by the end of the year. Plus, putting money aside on a regular basis, no matter how little, will get you into the habit of saving.
Make it automatic
Set a standing order to send money to your savings account on a regular basis. Even a small amount once a month will help grow your savings. Set the transfer to happen right after you receive your wages so it will feel like it’s just another bill.
Try a savings challenge
Make savings fun by turning it into a game. You can simply save all your £1 coins, try the 52-week savings challenge or just empty your change into a piggy bank at the end of each day.
Set a savings goal
This could be saving for something specific or saving a certain amount by a certain date. Having a goal is a great way to focus on savings and could help you spend less.
Pick the right savings account
Don’t just put your money into a savings account that gives you close to 0% interest. Consider other options, such as a cash ISA, where you don’t pay tax on the interest you earn.
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