Have you had to raid your savings in the last few months? If research from Halifax is anything to go by, the answer is probably yes. Their latest quarterly Savings Review found that the typical savings balance stood at £16,690 in the first three months of the year, over £1,000 lower than the average savings balance of the previous three-month period (£17,945), as household spending pressures took their toll.
The findings come despite the fact that, by all accounts, the wider economic environment is fairly positive – inflation remains at zero and average wages are starting to creep up, but many people's budgets still appear to be under pressure. The figures are even more surprising given that savings were a big part of this year's Budget announcement, not to mention it being the end of the tax year, which is typically a time when people realise they need to invest in their cash ISA.
Indeed, many failed to add anything significant to their nest eggs during the period, and 24% of those surveyed admitted that they didn't save anything at all. One positive finding is that this is down from the previous quarter when 30% didn't save anything, and the average amount saved has even edged up, standing at £795 saved during the quarter compared with £766 in the final three months of 2014.
This means more people are able to save more, on average, than they did in the previous quarter, but unfortunately, more were raiding their accounts, too.
The survey found that 26% of savers raided their accounts during the three-month period, and this, combined with any planned use of savings, means that average balances have yet to recover from the Christmas spending period, remaining over £1,000 lower than the previous quarter. And, while those who added to their saving pot managed to squirrel away just under £800, those who raided their accounts ended up taking an average of £1,087.
Spending on holidays was the most popular reason for dipping into savings (22% admitted to raiding for this very purpose), but three of the five main reasons for raiding were all linked to everyday spending and household expenses. Emergency car or home repairs where the culprit for 16% of respondents and 14% admitted to overspending on their current account, while 12% needed their savings to pay for unexpected utility bills and 11% used it to pay off debts.
Giles Martin, head of Halifax Savings, commented: "While it is encouraging that so many people are still saving regularly, the fact that balances remain lower and are yet to recover from the end of last year indicates that many consumers are still not prioritising saving, or are unable to save at previous levels. While consumer confidence may have improved, with higher employment levels and low inflation, it remains important that a good savings habit is encouraged and regular saving remains a central part of a household's financial planning."
If your savings pot has taken a hit in the last few months, it's time to get back in the habit. Even putting aside little and often can make all the difference, and if you need a kick-start, a regular savings account could be just the thing. Don't forget to make the most of your new ISA allowance, either, and if you think you may need to raid your cash for unexpected emergencies, opt for an easy access account so you don't need to commit yourself. Anything you can add will be worthwhile, and hopefully your savings balance will soon start to recover.
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