How strict are you when it comes to your savings habits? You may not be as committed to your savings goals as would be ideal, with research from Lloyds Bank finding that, despite all good intentions, many people regularly dip into their rainy day fund – and some don't even have this financial buffer at all.
The figures, from the latest Lloyds Bank Savings Report, revealed that 31% of respondents had to dip into their savings to cover unexpected outgoings in the final three months of 2015 – second only to withdrawing savings for a holiday – and even more worrying, just 26% cite building a rainy day fund as a primary reason for saving.
Many also don't set savings goals, at least not ones they feel they can achieve: over a quarter (26%) said they have set savings targets and are on track to meet them, while 16% have set targets but don't think they'll get there, but this means that a large proportion of people aren't even trying to set suitable targets.
Many of those on track to reach their goals attribute their success to good budgeting (50%), with 30% stating that the key is setting realistic savings goals in the first place, which has helped them stay on course. However, even this may not be enough to help those who have veered off the path, with 58% of those who don't think they'll meet their savings targets feeling that this is due to increased living costs.
"Holidays are the most common reason for withdrawal of savings, closely followed by needing funds to cover unexpected outgoings," said Philip Robinson of Lloyds Bank, "[and] it's concerning to see variations in how prepared people are to cope with unforeseen expenses. As we are at the start of a new year, it's a good time for people to review their approach to saving – planning and setting targets to help them reach their goals."
The most important thing you can do is have a clear goal in mind, as that way you can see how close you are to achieving it with each new savings deposit. A rainy day fund may sound like a vague goal, but its importance can never be underestimated – there are bound to be times when you're caught off-guard by an unexpected expense, and having a financial buffer can be invaluable.
It's generally recommended to have at least three months' worth of income saved for emergencies, but don't worry if that seems like an insurmountable sum. Be realistic with your goals – if you've yet to save anything at all, concentrate on building up your rainy day fund in small increments, perhaps focusing on the first £100 or £500 and going from there. Once you've started to see your pot grow, it'll spur you on to continue, and if you opt for an easy access savings account, you can add extra funds whenever possible – and you can withdraw it as necessary, too.
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