Over one-third of UK Adults say they have £25,000 or more in cash savings, according to new research from Starling Bank, and it seems that putting money aside for life goals is the key to building up a savings pile.
36% of UK adults have built up cash savings of at least £25,000, with 17% having £50,000 or more. And it’s not just an older generation sitting on a cash pile – almost 31% of 18-24 year olds are in the £25,000 + club. However, nearly a quarter (23%) has less than £500 in total savings, with exactly half (50%) having less than £250 in an emergency fund for unexpected expenses.
According to clinical psychologist Dr Jenna Vyas-Lee, when people have specific, positive things they want to save for, they put money aside considerably faster, a phenomenon she describes as ‘Saving for a Sunny Day’. However, saving can be harder without something specific to save for. The monthly sum going into an emergency fund is £183, covering everyday essentials such as repairs, bills, and medical expenses.
Yet those saving for a holiday say they are able to put an average of £316 a month aside and £409 when saving for a new car. Those saving for a wedding put away £371 a month for the big day, while those looking for a new wardrobe put away £213 for clothes.
The size of funds when saving for a clear goal were also bigger. A fund for those putting money aside for a holiday had an average of over £1,300 in it, compared to £987 for home improvements. A new car fund had an average of £1,594, versus £180 for money set aside for rental deposits.
Dr Vyas-Lee said: “Despite its importance, saving can seem like a chore. As with so many things, focusing on a positive goal can change behaviour, and language is key. So instead of ‘Emergency Expenses’, try ‘Peace of Mind Pot’. No more ‘Painting Fund’, hello ‘Interior Improvement.”