Small savings can pave the way to big dreams and help you stay debt-free. According to a report from UK Savings Week, maintaining a regular savings habit can shield individuals and families from financial setbacks, improve their chances of reaching long-term goals, and enhance overall mental wellbeing.
Benefits of Regular Saving
- Regular savers are more likely to own a home, manage their bills effectively, and maintain lower debt levels.
- Starting to save can significantly boost overall wellbeing.
- Savings schemes and incentives play a crucial role in encouraging a savings habit.
- Half of working individuals express interest in workplace savings schemes.
Regular Savers Are Less Likely to Fall Into Debt
The analysis showed that consistent savers are less likely to fall into financial hardship. Over the 10 years to 2022, 12% of non-savers had fallen behind with their bills, compared to just 2% of those who managed to save at least every other year.
The results also highlight that non-savers have higher debt-to-income ratios. Those who managed to save in as few as two of the survey years were a third less likely to have debts equivalent to more than 10% of their household income, compared with those who never saved.
Saving Regularly Improves Wellbeing
The researchers found evidence that having a savings habit helps people move from a vicious cycle of financial problems and poor mental health to a virtuous cycle of improved resilience and better wellbeing, no matter how small the amount saved.
It is those on the lowest incomes who are reaping the biggest benefits of putting a little aside, with 53% of savers in these groups saying they are satisfied with their life, compared with just 40% of low-income non-savers.
Low-income regular savers also enjoy similar levels of life satisfaction to non-savers on much higher incomes, such as being more optimistic about the future, their ability to relax and sleep better at night, and generally being more satisfied with life overall.
Savings Schemes and Incentives Work
There is evidence that savings schemes and incentives encourage better savings habits, leading to improved financial resilience and wellbeing.
Schemes such as workplace savings, where individuals pay into their savings at the start of the month before money goes into the household budget, achieved higher levels of savings success. Many people recognise the simplicity of building savings in this way, with research showing that more than 50% of individuals would be interested in a workplace savings scheme if their employer offered one.
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