New research, released to mark the start of UK Savings Week, reveals that one in three individuals aged between 18 and 34 are unable to cover an unexpected expense of £300. The Building Societies Association's annual campaign, which began on 21 September and runs until 27 September, seeks to highlight the importance of building savings.
The report also found that over a quarter of people have less than £1,000 set aside for emergencies. For those looking to start saving, instant-access accounts are suggested as a starting point, often requiring as little as £1 to open. Regular saver accounts, which typically accept monthly deposits of £250 to £500, offer higher interest rates.
The Financial Conduct Authority recommends having enough money to cover three months of expenses as an emergency fund. For long-term growth, fixed-term bonds can guarantee rates for the duration of the term, potentially protecting savings from falling rates over two to five years.
Savers are advised to compare rates regularly and consider switching accounts to ensure competitive returns. It is recommended to choose an account with an interest rate above the current inflation figure of 3.1% to prevent money from losing value over time. Opening an Isa is also suggested to avoid being taxed on interest earned, particularly for those with larger savings pots.