Savings. Whether it’s a rainy-day fund, a mortgage deposit or a retirement pot, savings are an integral part of your finances, no matter your end goal.
But exactly how much should you be putting away every month? And is there a magic number you should be aiming for?
We take a look at what the experts say, the national average and ask millennials how much is ‘enough’ when it comes to savings.
Experts Tell Us How Much We Should Be Saving
With many of us saving almost nothing on a monthly basis, and with 15% of Brits with nothing saved at all, we could definitely use a little expert advice on what we should be aiming for.
Martin Lewis, founder of Money Advice Service, advises six months expenses should be the goal. But three months would be a significant starting point, in case of an emergency.
Michelle Thompson Laing, budgeting expert and founder of Keep Calm Get Organised, also cites three to six months expenses as a good guideline, but acknowledges those who have no income left at the end of the week need to start small and build up over time.
Harvard Bankruptcy expert, Elizabeth Warren has a different approach. She believes if you save 20% of your pay-cheque should go into savings. It’s less about the end goal and more about forming good habits you can scale to any income.
So, although there’s not a one-size-fits-all answer to how much you should be saving, the experts guidelines are a good place to start.
And if that’s not possible with your salary, start smaller - just make sure you start somewhere!
How Much Do People Have In Savings?
Perhaps you have nothing saved, perhaps you’re pretty much financially ready to retire now!
See where you fall compared to the National Average - we look at the facts and stats to understand how much the people of the UK have tucked away.
According to Finder, one in three Brits have under £1500 in savings and as mentioned above, 15% have no savings at all.
The Money Charity reported in 2017 that 71% of households in the UK had less than £10,000 in savings in 2017, and that percentage has likely to have increased since.
So, if you’re struggling to build up your savings, you’re not alone.
Should You Save If You’re In Debt?
Don’t wait until you’ve paid off all your debts before you start thinking about putting some money away into savings.
By working at both areas - paying off your debts and putting money away - you’re less likely to add to your debts if something was to go wrong.
If you’re feeling financially stretched and can’t cover all your debts and expenses, look into debt consolidation as an opportunity to free up some money per month. You could be paying less interest and have just monthly payment to keep track of.
Use our loan calculator to see how much interest you could save.
Why Should You Save?
If so many people are getting by with no savings - why should you save at all?
- Saving allows you to work towards your future and your financial goals.
- Having savings can will stop you from going into or adding to your debts for an unexpected expense.
- If you have three - six months of expenses covered, you won’t be as affected by redundancy or job loss.
- With enough savings and a good interest rate you can earn additional income.
- You’ll feel in control! This will reduce the stress and anxiety associated with financial difficulty.
- By saving month by month you’ll have a better understanding of your finances and can be flexible with your budget to suit your short-term needs and long term goals.
How Much Should You Have In Savings: Key Facts
- Financial experts say that you should have around three - six months worth of expenses in savings to protect you from financial shock.
- The average household in the UK has under £10,000 in savings.
- Even if you’re in debt it’s important to put money into savings as a safety net.
- If your debts are stopping you from saving, look into debt consolidation with a peer-to-peer loan to reduce your monthly payment amount.