Saving is something that we all need to get in the habit of, but the question is, what are you saving for? Research from Skipton Building Society has revealed that, far from funding long-term goals, the majority of savers have far more immediate objectives…
The research found that a rainy day is the top priority when it comes to saving, with respondents more likely to be saving for this kind of event than material objects or far-off goals. It even takes precedence over things like house-buying, showing that most savers take a more short-term view.
The survey revealed that 44% of consumers are currently saving for a rainy day, easily outweighing the number saving for the future (30%) or retirement (27%). Even saving for home improvements doesn't come close (16%), nor does saving for a car (13%). Saving for a home ranks surprisingly low in the priorities list, too, with just 12% saying that they're saving for this purpose.
Nonetheless, saving for life's emergencies is something to be commended – we're often being told of the importance of having around three months' salary set aside as an emergency fund, and it seems that the message about saving diligently for those rainy days is setting in.
The figures went on to reveal that savers are actually able to squirrel away a fairly sizeable amount, too, with respondents saving an average of £286 per month. They typically have between two and three different savings accounts with an average total balance of £23,579, a healthy rainy day fund by anyone's standards.
However, that's not to say that everyone's quite so strict. Around one in five (19%) of respondents admitted that they don't save anything at all, with 73% of those saying it was because they didn't have enough money at the end of the month, while 10% said it was because they didn't understand enough about the different savings products available.
Furthermore, while some people have a tendency to dip into their savings, there's a clear difference in terms of age, with the younger generation being twice as likely to dip in: the figures show that 29% of 18-24 year-olds surveyed dip into their savings once a month or more, compared with 14% of 25-34 year-olds, 13% of 45-54 year-olds and just 7% of over-55s.
"Saving for the future is often pushed down the priority list, so it's encouraging to see [that] more people are saving for a rainy day than material objects," commented Kris Brewster of Skipton Building Society. "This is likely a legacy of the UK's economic journey over recent years – people recognise the need to have a financial contingency in case something unexpected happens.
"With an ever-changing landscape that can be challenging to navigate, one thing that came across clearly in our research is that we all have different savings goals, so it's important to understand which savings product is right for you."
The kind of product you'll need will vary according to your needs and ultimate savings goals. Easy access accounts could be ideal for those who wish to add to their pot on a regular basis, or even a regular savings account if you're confident in being able to stick to the habit. Fixed rate bonds could be the best bet for those with longer-term goals in mind, and what about ISAs? These are available in a variety of forms, and can ensure you're able to maximise your ISA allowance and benefit from tax-free saving for life, no matter what your goals may be.
Compare savings accounts to see if you can find the best option for you
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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