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Saving for life’s little hiccups

Saving for life’s little hiccups

Category: Savings

Updated: 17/11/2010
First Published: 17/11/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Half of UK households (11.5 million homes) are walking on a tightrope when it comes to managing to pay bills and falling into debt. The MoneyMood Survey, from Legal & General, shows that Brits are not doing enough towards saving for a rainy day.

Almost a third (30%) of households in Britain have to somehow find money that they don't have when it comes to paying for unexpected monthly bills. For these households, the average unexpected bill amounted to £178. Having to fix a car and fixing or replacing a household appliance were the most given reasons for having to dig deep in difficult times.

"More than ever, unexpected bills are likely to put pressure on household finances or push families into debt," commented Mark Gregory, Legal & General executive director, Savings.

"Finding extra cash to meet the average unexpected bill, which is just under £180, could be tough if you're one of the 11.5 million households who, our research shows, are struggling to make ends meet each month."

Saving a small amount each month, such as £50, could go along way in helping you prepare for life's little hiccups. After 12 months, you could have put aside a healthy sum of £600, and that's not including the interest you would have earned if you invested your money into a savings account. Perhaps the best way to build up a rainy day savings fund is to open an account that allows you to dip in and out of your funds as and when you need to.

Santander's eSaver Issue 2 account offers savers a variable savings rate of 2.75%, and customers can make as many withdrawals and additions as they please.

The account can be opened with as little as £1 although savers should be aware that this cracking rate includes a bonus of 2.23% that ends after 12 months, after which you may wish to look for a new account.

Chelsea BS also offers an eye catching savings account for people that would like to add funds each month but with the comfort of knowing they can access their money when they need to.

The e-Saver Reward offers a variable rate of 2.60% and interest is paid monthly. As with the Santander account, deposits start from just £1, although customers should ensure they keep an eye on their rate, as it can be reduced.

Mr Gregory added: "With a 30% chance of being hit by an unexpected bill it makes sense for households to look at their budget and get into the habit of saving a small amount each month to shield themselves against nasty surprises."

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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.