*A collaborative post
How much do you save each month? £50? £100? A recent report has discovered that UK low income families have just £95 in their savings to fall back on, should the month take a turn for the worse while their ability to actually put money away is hindered by debt, bills and unexpected expenses.
At the end of 2016, households in Britain hit a record low when it came to savings, with the savings ratio dropping from 5.3% of disposable income to just 3.3%. With Brexit looming on the horizon, this figure paints a concerning picture for the future of UK households as inflation rises on the essentials pushes up the cost of living.
Wages are also not increasing enough to keep up with these rising costs, causing purse strings to tighten and savings accounts to remain stagnant. Inflation reached a two-and-a-half-year high earlier this year which is said to be pushing many families to the brink of poverty and for many of these people saving a little cash doesn’t seem possible.
How can UK households save a little more?
Look for high interest savings or even current accounts
Some current accounts – whether taken out as a joint account or by an individual – can offer you substantial interest each month if a certain amount is paid in. There is usually a fee for this, so it is best left reserved for those who have a little more disposable income each month. Nationwide, for example, offers its FlexPlus account which costs £10 a month but offers 3% in credit interest on balances of up to £2,500 as well as a three-month fee free overdraft.
Shop around for savings accounts and ISAs that will annually deposit interest into your account that you can then enjoy.
Make savings part of your monthly budget
Ensuring that at least £50 is set aside to be moved into a savings account can ensure there’s always a little money on the side as a backup. Removing it from your main account ensures it won’t be touched immediately and if it is simply a part of your bill outgoings at the start of the month you won’t notice it leaving. You’re always free to move it back later if it is needed but just creating such a habit can improve your savings situation.
Keep a close eye on your account
It’s a good idea to regularly check your bank account, to ensure you know exactly what is incoming and outgoing. Any unnecessary direct debits can then be removed and that money released and moved into a savings account.
In 2017, it seems that UK households are struggling to put away enough savings for a rainy day, as the impact of low wage increases and the rising cost of living takes its toll. For those looking to keep money aside, it’s best to start small, look at budgets and ensure that every penny is accounted for.