Earlier this year, sources reported that over half of Brits took steps to boost their savings during the lockdown. At an average of £5,000 per household, this was a promising start for many who had never had significant savings before.
However, according to figures released recently, MPs are now saying that one in four Brits saved nothing during the pandemic.
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A large number of Brits don’t have a safety net
According to data shared by the All-Party Parliamentary Group on Financial Resilience, 24% of working-age adults didn’t save any money during lockdown. Even more worrying, 20% of working-age adults say they wouldn’t have enough money to pay their bills at the end of a month if they didn’t get paid on time.
When market research firm Focaldata surveyed 10,000 people this summer, it found numbers were even more worrying. In fact, 35% of Brits said they saved nothing in a typical month. But even among those who had savings to last two or three months, half were not saving any more money at all.
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Causes of the savings gap
According to Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, some groups are more likely to struggle with savings than others. This includes women, self-employed people, and those on a lower income.
“Many of those who were able to work from home saved more and now have a bigger savings safety net than ever to fall back on,” says Coles. “Meanwhile, those who lost work, hours or pay have been struggling ever since.”
It’s also an issue that Brits aren’t keeping up with the basic steps to achieve a better financial balance. This includes not only saving but also controlling debt and planning for later life.
Taking steps towards saving
With the year nearing its end, now is the time to take a hard look at your finances. It’s never too early to make money goals for the year ahead. But you can also start by looking at where you can cut corners to free up some money. This could include subscriptions, memberships or expenses you had this year that you didn’t use as much as you expected. Or you can consider new habits you can introduce to reduce costs in 2022.
Other things to do in December to improve your savings rate include:
- Opening a savings account or a cash ISA if you don’t have one already. You can then set up an automatic transfer from your regular bank account. Even £50 a month is a good start if you haven’t been saving anything until now.
- Figure out ways to deal with stress spending. Every penny you spend on something you don’t need is a penny you could be saving. Exercise, a meditation app, hiking with your dog or watching a film are all better alternatives than stress spending.
- Try a money savings challenge. With the new year just around the corner, it’s a great time to try a fun challenge like saving your pennies or saving a certain amount each week.
