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Families seizing the savings gauntlet

Families seizing the savings gauntlet

Category: Savings

Updated: 23/05/2011
First Published: 23/05/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Families are stepping up to the challenges presented by the economic uncertainty and increasing their financial safety nets, new research has revealed.

Fewer families currently have no savings than at the start of the year, according to Aviva, while the average amount being put away each month is also on the rise.

Basic building society and bank savings accounts are the products most commonly used by families to save, followed by a cash or stocks and shares ISA, and premium bonds.

Attempting to explain the rationale behind the order of preference, the report suggests that the 'easy access' nature of basic savings accounts is more appealing to ordinary savers than the tax breaks available through ISAs.

However, while families have been displaying an eagerness to increase their savings cushion, it appears they might have been doing so at the expense of tackling their debts.

The survey showed the average debt built up through credit cards, loans and overdrafts has increased since the start of the year.

The 'squeezed middle' is the main driving force behind the increase, with the largest rise in average debt being seen by those families in a committed relationship with children.

With this group likely to find credit more readily available than others, the report said an unexpected expense, such as a new car or holiday, may account for the increase.

"While economic conditions are tough, it is important that where possible, families work to put aside something each month," said Paul Goodwin, head of pensions marketing at Aviva.

"However, in an uncertain economy, it is essential to look to pay debts down where possible and avoid additional financial obligations."

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