If the coronavirus pandemic has taught Brits anything, it’s the importance of personal financial responsibility. After being caught off guard, many of us realised the importance of having a financial safety net and became more eager than ever to save money. But despite the emergence of a strong savings culture, a new study suggests that the UK is currently facing a savings shortfall of up to £371 billion.
What’s the reason behind this huge shortfall? How can you boost your savings to secure your financial future? Let’s take a look.
How has the Covid pandemic affected savings?
Despite the devastating economic impact of the pandemic, savings levels across the UK have soared.
In the context of repeated lockdowns, this is not entirely surprising. Lockdown measures and restrictions provided some people with an opportunity to save more money by eliminating costs such as commuting, eating out and leisure activities.
Why are Brits facing a savings shortfall?
Though Brits were able to save more during the pandemic, many are still falling short of what they would need to feel financially secure. This is according to a new study conducted by the Yorkshire Building Society (YBS).
As the BBC highlights, the difference between people’s current savings and the amount that they would need to feel financially secure is about £371 billion.
The big shortfall is attributable to the fact that not everyone has been able to save during the pandemic. In fact, some people are even more exposed than they were before restrictions hit.
As Nitesh Patel, strategic economist at YBS, says, “There are still pockets of society who have been more significantly impacted.
“As the economy gets back on its feet, it’s essential that we remember that many people have been made more financially vulnerable by the impacts of the pandemic.”
The YBS study found that UK adults require a nest egg of £17,465 to feel secure financially.
That means that the average Brit needs an extra £7,220 in savings in order to reach this goal.
How can you boost your savings?
Feeling that the amount you’ve put away is not sufficient to secure your financial future? Here are a few practical tips to help you save more.
1. Get on a budget
A budget can help you ensure that you’re not spending more than you need to. It can help you spot areas where you are overspending and can save money, which you can redirect to your savings.
2. Embrace automation
If you want to save but are worried about committing to regular monthly payments or if you simply lack discipline, consider automating the process.This entails setting up an automatic transfer from your current account to your savings account the moment your paycheck is deposited.
You can also take advantage of mobile apps such as Plum, which use artificial intelligence to calculate exactly how much you can afford to save and then transfer the amount without you having to do anything.
3. Shrink your bills
Check that you’re getting the best deal for things like gas, electricity and car insurance. Shop around and compare quotes from different providers when your current plan ends rather than automatically renewing.
4. Switch your bank account and earn free cash
Did you know that you can get paid simply for switching your bank account? Nationwide, for example, will give you a bonus of £125 when you switch to one of their popular current accounts. Check out other banks that will reward you for opening an account.
5. Transfer your credit card debt to a 0% deal
If you’re currently paying off a lot of credit card debt, consider transferring the debt to a 0% balance transfer credit card. This will give you more time to pay it off without accruing more interest, giving you a chance to save money.
6. Cancel unnecessary subscriptions
With most restrictions eased and more venues open, you probably don’t need as many entertainment subscriptions as you did previously. See which ones you can do without and consider cancelling a few of them.
7. Get a side hustle
A side hustle is a great way to earn extra money to put towards your savings. A few worth considering include driving for a ride-hailing service, freelance writing or tutoring, taking online surveys and selling goods on eBay. For more, check out our article on unusual side hustle ideas in the UK.
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