Has the recovery put a bit more cash in your pocket? Hopefully you're feeling the benefits, but the question is, what are you doing with all that spare cash? Happily, many people are saving it, with savings levels now at their highest level for a decade.
Research from the latest NS&I Quarterly Savings Survey has revealed that savers put more money away in 2014 than at any time in the past 10 years, with typical monthly savings increasing by 9.25% last year. The figures show that the average saver put away an average of £113.77 every single month in 2014, up from an average of £101.03 per month in 2013.
This equates to 8.52% of average take home pay (up from 8.04% in 2013) going straight into a savings account, marking the highest share of monthly pay to be saved since the survey began in 2004. It's also significantly higher than the low point of 5.82% recorded in spring 2005, showing how ingrained savings habits are becoming.
The survey also found that attitudes towards saving were broadly positive, with 74% of those who put money aside each month saying that they did so because it was the right thing to do, without having a specific goal in mind. This suggests that saving is becoming more of a habit, a done thing rather than a sporadic activity, ensuring that they'll have money available should they need it.
However, despite the increased level of savings and the positivity surrounding it, the survey noted that further improvements could still be made. Of those who regularly put money away, 29% said they didn't think they had enough set aside in case of an emergency, highlighting the need to build a solid financial buffer.
"The latest results are encouraging, but we hope more people will be putting aside money into their rainy day savings, so they feel ready to deal with an emergency should one arise," said Julian Hynd, retail director at NS&I.
If you're one of the 29% who don't have enough saved for an emergency, it's time to focus on building a suitable pot. It's generally recommended to have around three months' worth of income set aside in an emergency fund, but don't worry if that sounds like an impossible amount to amass – even saving little and often can soon add up, particularly if you find the best rates.
Ideally, you'll want to put these emergency savings in an easy access account that doesn't penalise you for withdrawals, because you never know when you may need to access your cash. Alternatively, if you've already got a bit of a financial buffer and want to focus your attention on getting in the savings habit, opting for a regular savings account could be ideal. It'll be the kick you need to meet your savings goals and will mean you'll have no option but to add to your monthly savings tally, and after a year of saving, you'll hopefully have a decent pot that can be put to good use.
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