Saving for a financial safety net 

Debt Advice Now advises people to put savings aside to increase their financial security - and safely achieve their financial goals for the future.

by Andrew Taylor Monday, January 30, 2012
Debt Advice Now has advised people to start putting money into a savings pot wherever possible, in order to provide a safety net for times when finances are tight, and as a sensible way of planning for financial goals further down the line.

The comments follow a new report from First Direct, which warned that around six million UK households would only have enough savings to last them for five days - just £250 - should they stop being paid for whatever reason.

Furthermore, the survey of more than 1,000 households found that 20% of people have no savings whatsoever - highlighting a worrying lack of financial security and planning amongst many people.

And what with the financially unstable climate bringing job uncertainty, squeezed incomes and rising living costs, having a financial safety net for potentially difficult times ahead could be the difference between staying financially afloat and ending up in the red.

A spokesperson for Debt Advice Now commented:

"Many households could be seriously risking their financial security by not having savings set aside for emergencies and those times when we could do with a little financial help.

"Firstly, we never know what's around the corner. It's important to ask yourself how you'd cover the cost if you needed to pay for car repairs, your boiler being fixed or an unexpected medical bill, for example. Given that many households are sticking to careful budgets to make ends meet, you could risk falling into debt if you don't have sufficient funds to meet the expense.

"As a general rule, it's a good idea to have at least three months' salary set aside as a financial safety net. Of course, different people will be able to afford different amounts to put aside every month - so it's important to review your budget and work out how much you can realistically put into a savings pot, once all your essential costs and other regular outgoings have been accounted for.

"Some households may feel they'd benefit from 'freeing up' a bit more cash every month to put into savings. If this is the case, there are steps you could take to increase your 'saving power'. For instance, are there any cutbacks you could reasonably make? It could make sense to reduce monthly petrol costs by using public transport more, or car pooling with work colleagues. If you buy lunch at work every day, you could save some money by cooking at home and taking the leftovers. Even making these small cutbacks could see your savings pot grow in the long term.

"And remember that saving doesn't have to be seen as a chore. Starting a savings pot could be a great way of achieving your financial goals in the year/s ahead: whether it's saving up for a family holiday, redecorating the kids' bedrooms, or buying a new fridge. Think about it: even if you put away £50 a month aside starting now, by June you'll already have saved £300. Don't forget about interest either: putting your savings in a high-interest savings account could see real returns on your money. A good online savings calculator could show you just how your money could grow.

"Finally, if you're currently repaying debts, it could make more sense to repay your debts first, before starting a savings pot. A professional could help you draw up a financial plan for the future."

-ENDS-

For more information, visit the Debt Advice Now website at: http://www.debtadvicenow.co.uk

Debt Advice Now specialise in helping UK residents address their debt problems, identifying the debt solutions that can help them repay their unsecured debts in a way that''s appropriate to their individual situation. For more information, visit the Debt Advice Now website at: http://www.debtadvicenow.co.uk Contact: To speak to Debt Advice Now, please call 0800 970 7673

General | Categories: financial, financial
0    submitted by Andrew Taylor
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