Image source, Getty Images
- author, Kevin Peachey
- role, Cost of Living Correspondent
A new report suggests that saving money regularly could improve the quality of your sleep.
A study by researchers at the University of Bristol also found that saving a set amount each month, even if it’s small, can help people feel more relaxed and optimistic about the future.
Low-income people who save regularly have life satisfaction that is just as high as wealthy non-savers, the researchers said.
A quarter of British adults have less than £100 in savings, according to a survey.
Despite improved interest rates from banks and building societies in recent years, skyrocketing bills and food prices have made it hard to save money.
It’s estimated that six in 10 people have a savings habit, and charities argue that putting money aside even when your income is low can improve your financial resilience.
A report from the Centre for Personal Finance Research at the University of Bristol suggests that saving regularly, even if it’s only a small amount, can improve life satisfaction.
The report suggested this could be a result of people feeling less anxious about money, being less likely to experience problematic debt, or being better able to cope with unexpected events.
The picture is relatively complex, with other factors also coming into play, such as whether people had existing savings and whether their situation varies by age group.
The researchers looked at a variety of studies, including one that tracked the savings of thousands of people over a 10-year period.
They suggested that saving increases life satisfaction, but that not saving also has disadvantages.
But other life events had a bigger impact: moving house and getting married, for example, produced bigger improvements in mental health, while losing a job and having a baby produced bigger deficits in mental health.
Revenues are expected to decline
The interest rates paid by thrift institutions improved during periods when interest rates were higher.
Currently, the average interest rate on an easy-access account is 3.12%, according to financial information service MoneyFacts. If you leave your money in one for a year, you’ll earn an average return of 4.65%.
However, returns are expected to decline if the Bank of England cuts its base rate, with the first decline likely to come in August.
Andrew Gall, head of savings at the Building Societies Association, which funded the research, said: “We recognise that some people will not be able to save right now, but the findings of this report show why we should encourage everyone to save a little while they can.
The report said savings accounts should be made simple and flexible, and incentives should be used to encourage customers to save.
What savings options are available?
- As a saver, you can find the account that’s best for you.
- Loyalty is often unrewarded, as the interest rates on old savings accounts are among the worst.
- Savings products are offered by a variety of providers, not just the big banks, and the best deal for everyone isn’t the same – it depends on your situation.
- While higher interest rates are offered if you leave your money in the account for longer, that doesn’t suit everyone’s lifestyle.
- Charities say no matter how tight your budget, it’s important to have some savings set aside for unexpected expenses.
