A recent report from Scottish Widows revealed that nearly one third of UK residents are not saving any money. Dealing with the difficult economy and providing financial assistance to family members has placed these 15 million people in a very uncomfortable financial situation.
Few of them expect the economy to turn around this year and 17 percent report having no savings at all. Of those who are managing to save money, nearly one-third have amassed less than £1,000, which would not cover their council tax and mortgage for a single month.
Parents are lending money to their children, who are also struggling with stagnating wages and high costs of living. Loans from parents include money designed to help children attend university and get on the property ladder. These loans averaged £15,000, an 11 percent year-over-year increase, and have forced just under 25 percent of parents to reduce their own savings.
According to the report, such loans forced one in every twelve parents to stop saving. Grandparents are also feeling the financial pinch due to lending an average of £3,665 to grandchildren.
While costs for energy, food, petrol, and rent are increasing, savings account interest rates are dropping, making it difficult for savers to earn notable returns. Many people are using their extra money to repay debts, taking a cautious approach during this struggling economy.
Though this is beneficial over the short-term, it leaves people unprepared for future financial needs. A redundancy or other situation could make it impossible to make mortgage payments or cover daily living expenses without having any type of savings.
Do Not Give Up On Savings
When faced with record-low savings rates and little extra money, it can be tempting to forego savings. Since 2009, balances in British savings accounts have fallen by 17 percent. They began to improve during the first half of last year but fell during the second half and continue to decline. One-quarter of consumers are in dire straits financially, unable to afford feeding their families healthy diets. Given the choice of eating well or saving, they choose healthy eating.
Despite tight budgets, consumers should not neglect savings. Household budgeting and planning are two ways to live affordably and have money remaining for savings. When they list their regular outgoings, many people realize they are spending money on unnecessary things. Dues for an annual fitness membership that is barely used, excessive levels of insurance, and unnecessary expenses for dining out are three common discoveries.
Reducing or eliminating unnecessary expenses will make the household budget more attractive. Money that is freed up can be deposited into a savings account for emergency expenses. Once this account contains enough to live on for six months to one year, attention should turn toward retirement savings.
UK residents should not rely on their pensions alone during the retirement years. They should use other investments to supplement these payouts so they will not need to sacrifice their future lifestyles.
Simple Ways To Save
Though budgeting and planning will reveal significant savings opportunities, they are not the only ways to save. While many people think that drastic lifestyle changes are required to save money, something as simple as enrolling in direct debit bill payment can reduce expenses substantially over the long term. For example, switching to an online fuel deal can save more than £200 per year. Changing the mobile to a contract account can also save money without making any sacrifices.
Keeping track of daily expenses can reveal additional opportunities for savings. Rather than stopping to purchase coffee and a newspaper on the way to work, prepare coffee at home and read the news online or listen to it on the radio. Snack cravings that hit in the middle of the workday can be satisfied by a container of fruit, vegetables, or pretzels brought from home rather than something from a vending machine. Packing a lunch for work or school rather than purchasing it can save at least £40 a month.
Plan Shopping Trips
Having a shopping list can prevent the urge to browse store aisles and add unnecessary items to the cart. Base the list on the food already in the cupboards and freezer. Make supermarket trips only once a week and stay away from corner shops that encourage impulse buys.
Following these guidelines can save £10 to £30 each week, money that can be deposited into a savings account. These tips also prevent shoppers from wasting food because they encourage buying only what is needed.
Make Annual Costs More Affordable
A savings account can also be a tool for handling annual expenses. Once-a-year payments are typically large, taking a hit on the budget in a single month. To minimize their impact, divide annual costs for MOT, car tax, car maintenance, and holiday gift-giving by 12 and save this amount monthly.
The money will earn interest and prevent having to use wages from a single month to pay these annual expenses. While dividing annual costs for gifts, consider agreeing to a spending limit or participating in a pollyanna with friends and family.
If finances are really tight, unused household items can be sold to provide a savings nest egg. Many people are in need of fitness equipment and if yours is going unused, consider selling it. Buyers will save money by purchasing a used model and your bank account will benefit from the extra income.
There are many other ways to make money from items around the house including repurposing and reselling. Consider the possibilities before discarding an item or letting it sit in a closet for another year.
These are just a few ways to save money that can be contributed toward savings. Even when funds are minimal, foregoing savings is not a smart idea. The time will inevitably come when that money is needed and having it on hand will make the situation easier to handle. There will be no need to take a loan that can be difficult to find and represents additional debt at risk of future default.