5 min read

Six scary stats to kick-start your saving this Halloween

It’s Halloween, that spooky time of year when you put on your witch’s hat, cut holes in a pumpkin and eat far too many sweets. You’re probably not scared by the fake blood and plastic skeletons, but you might get the heebie jeeebies when you read these scary statistics about saving…

Family dressed up in halloween costumes with pumpkins around them

A spine-tingling lack of savings

Did you know that two in five of the working population in the UK have less than £100 in savings?

This means that one financial emergency could leave nearly 17 million people in debt. This isn’t through a lack of desire to save but instead not having an expendable income with which to do so. In addition, many people just don’t have the money management skills to put money aside each month.

Horrifying house deposits

Research from Tesco Bank found that the average deposit people are putting down for a property is now £61,607. The highest deposits are in London, at £90,685 on average, and the lowest are in Wales at £41,407.

The average homebuyer is saving more than £500 a month in order to get on the ladder. It’s taking people longer and longer to save for house deposits so it’s worth considering your savings options, for example if you’re thinking long term you could look into investing in stocks and shares.

Hair-raising home improvements

Once you become a homeowner, you might start thinking of ways to redesign your home, and hopefully increase its value.

One of the most popular home improvement projects is a new kitchen, but figures from Zopa show that on average it costs £17,690. The plus side is that it can add 10% to the value of a property – so not all bad.

Depending on your budget and time scales, there are a number of ways you can fund home improvements.

Nerve-jangling job losses

An unpleasant scenario to think about, but the loss of a job can happen to anyone, so it’s wise to be prepared. Ideally you will have enough money in an easy access savings account to cover three to six months’ worth of living expenses, including your rent or mortgage. If you earned £27,000 a year, you would need a sizeable cash cushion of £10,818 to equal six months of your take-home pay.

Chilling childcare costs

Parents spend on average £11,498 in the first year of their child’s life, with babysitting and childcare costs contributing the most to the total, that’s according to recent research. It means the annual cost of raising a child eats up 38% of the average UK household’s budget, leaving six in ten parents struggling to manage their outgoings.

If this sends a shiver down your spine, don’t fret – there are ways and means to get help with childcare costs.

Rotten retirements

How much do you really need to live comfortably in retirement? Research suggests it’s about two-thirds of your salary.

To achieve this, you’ll need to put away a percentage of your earnings equal to half your age at the point you start saving. So if you start paying into a pension at 32, that’s 16% of your salary. Say you’re earning £30,000, that means you should be paying £315 into a pension each month. That’s a scary thought, and unrealistic for many. Instead you could aim for the more manageable 5% of your income as even little amounts can build up over time.

Suitably terrified? Here’s what you can do to ramp up your savings pot

If you don’t have a savings habit, start small. By sacrificing a little of your disposable income each month, you can start to build up a cash buffer. The important thing is that you do it regularly. Because interest rates on cash savings are very low right now, consider investing instead.

Stocks and Shares ISAs could be an option

A Stocks & Shares ISA could give you a better return than saving in cash. There are no guarantees of course, as it’s dependent on market fluctuations so it’s possible you may get back less than you invested, but there is good potential for growth over the long term.

You can select ready-made Stocks & Shares ISAs from many providers, so you don’t even have to know anything about investing, the hard work of fund and stock selection is done for you.

Alternative options to build up your savings

Another option could be drip feeding money into a Family Bond, a savings plan that lets you invest just £25 a month or £270 a year, and keeps your returns away from the taxman as long as you invest for at least 10 years.

Invest in your future, not just the here and now

This 31 October, why not start a savings habit so you can be prepared for what the future holds, instead of facing a nightmare worthy of Halloween?

Sources: https://www.thesalarycalculator.co.uk/salary.php

Written by Hannah Smith – Financial Journalist

Note: Whilst we take care to ensure Talking Finance content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions. The opinions expressed within this blog are those of the author and not necessarily of OneFamily.