Recent research undertaken by the Yorkshire Building Society in its ‘The Nation’s Nest Egg’ report, showed Great Britain is currently facing a savings shortfall of £371billion. Although many people have managed to save more money during the last 18 months, this shows how far many individuals are from reaching a point of financial comfort. The shortfall equates to an average of £7,200, per person. However, the matter is exacerbated for those aged between 45 and 54, who face a sizeable savings gap of £10,280.
Regardless of age, as inflation rises at record levels, many people will need to consider how they can make their money go further, and potentially make a series of changes.
Firstly, Britons are encouraged to review any savings they currently have, as a low interest environment means many will have to make sure their money is working as hard as possible. Recent figures have suggested there is approximately £246.5billion in accounts which currently pay no interest at all.
Ms Hughes stated that if individuals have built up money through their current account, it could be worth shopping around to see if any money could be transferred into an easy access or fixed term account. These could create better interest rates, but for the latter, in exchange for limited access.
A second point to make one’s money go further is to look into spending habits, a perfect way to help boost savings.
Ms Hughes said: “Be that reviewing your direct debits and seeing if there is anything you are paying for that you are not really using or simply making your own lunch instead of a shop bought sandwich.
“Also, with energy prices and tariffs increasing, make sure you are on the best available deal as this could save you money. These small changes can go a long way, especially with inflation at an all-time high, as you may find outgoings increasing.”
One big way where money could be saved is looking in detail at one’s mortgage. Although house prices have risen, mortgage rates are falling and so if someone has come to the end of their deal, they could remortgage to lock in the best possible rate.
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Remortgaging is often seen as one of the best ways to make big savings on monthly payments, and as this is likely to be a person’s largest monthly outgoing, it could make a real difference.
However, older people are also encouraged to look at the idea of downsizing. They could stand to make money on selling a more expensive property in favour of a smaller one and then pocketing the difference in a savings account.
Ms Hughes has also recommended individuals look at their pension pot, in order to understand how to make it work the hardest it possibly can to secure one’s future.
She continued: “If you can afford to it is worth increasing your workplace pension contributions to as high as you can.
“A lot of firms will also match your contribution up to a certain percentage meaning you are building a healthier pension with their money supporting yours.
“For those over the age of 55, the Government allows a ‘pension drawdown’ meaning you have the ability to take a quarter of the value of their pension, tax free.
“Investing these funds could well be a flexible option for those who want to increase potential returns on their pension, but as with any investment, this is not without risks and financial advice should be sought before any decisions are made.”
Finally, Ms Hughes acknowledged there may be some individuals who are uncomfortable financially, and may need additional forms of support.
This is particularly the case for many of those who have been struggling with the impacts of the pandemic on their day-to-day lives and financial security.
As a result, then, she actively encouraged individuals to seek out advice and speak to experts, pointing Britons towards the Money Helper platform.
The Government-led website is described as a “great resource” and covers issues such as debt, housing, loans, benefits, and even tips for saving and budgeting.
Ms Hughes also said Britons can speak to their savings provider, whether this is Yorkshire Building Society, or someone else, who may be able to provide more tailored assistance.