If you were lucky enough to get an unexpected cash windfall, would you save it or spend it? Well, if research from GE Capital Direct is anything to go by, the answer probably depends on how much you received.
According to the figures, £648 is the tipping point between splashing the cash and saving it for a rainy day – at this amount, 51% said they'd rather save compared with 49% who would spend. Any less and recipients of a windfall are more likely to treat themselves (73% of those who unexpectedly received £100 said they'd rather spend it than save it) while higher amounts would mean they were far more likely to squirrel it away (75% would save if they received £5,000).
It's a sensible move, and the figures are perhaps unsurprising when thinking about household budgets. Considering how stretched a lot of them are, a nominal windfall of around £100 could come in very handy to cover essential spending – or even the odd treat that people aren't normally able to afford – while higher amounts will sensibly be put away for emergencies.
Of course, it's important to remember that even smaller amounts can soon add up, and a nominal windfall could still help bulk up your savings pot – particularly with the likes of compound interest added into the mix. At the very least, you may want to put it in an easy access account before you decide what to do with it, which will help you maximise your cash at every opportunity.
Commenting on the findings, Sheragh Beirne, of GE Capital UK, said: "Getting an unexpected cash injection is always exciting, be it a few hundred pounds from a tax rebate or a healthy bonus. While, as our research shows, it is often tempting to treat ourselves when we receive a relatively modest windfall, regularly saving extra cash builds a bigger and healthier pot for years to come – whatever your savings goal."
So, what would you do with a windfall? It may seem unlikely, but the study shows that around a third (32%) of people have received such an unexpected pot of cash – to the average tune of £34,247. The most common sources for a windfall are inheritance (57%), bonuses (20%) and gift money (12%), and this can range from a few hundred pounds to a life-changing amount.
These life-changing windfalls tend to come later in life, usually in the form of an inheritance, with the average amount handed down being £40,457 – over five times higher than the average windfall received from bonuses, tax rebates, gifts and dividends combined (£6,137).
The majority of people surveyed (57%) who recently received this kind of sum as inheritance said they saved the money, while 22% put it towards a holiday or other significant purchases. Younger recipients, however, would be more likely to put the money towards a deposit for a house – 48% of those aged 25-34 would do so, compared with the cross-age average of 9% – clearly demonstrating different life-stage priorities.
No matter how old you are or what your life goals may be, deciding whether to spend or save will be your biggest decision should you be lucky enough to receive a cash injection. Happily, 49% of those surveyed think of themselves as savers, and if you're one of them, it's time you found the account to match! Whether you're saving for a rainy day, for life's emergencies or for a major purchase, it's all about finding the account – and the rate – that will help you achieve your goals. Use our comparison tables to get started.
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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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