A Quarter of Brits Feel That Saving Small Amounts is Not Worth It
According to a recent study, one in four Brits don't see the point in saving small amounts of money at the end of the month. Even if they only have a few pounds to spare, they believe it's not worth putting it into savings. This mindset is despite experts advising people to start saving now, no matter how small the amount.
The Struggle to Find Motivation to Save
The study of 2,000 adults found that 57% of respondents struggle to find the motivation to put money aside for savings. However, despite this, 9% of those surveyed admitted to checking their online bank accounts multiple times a day.
Introducing Plum Interest
In response to these findings, smart money app Plum has launched a tool called Plum Interest. This tool shows users how their few pounds could grow over time thanks to higher interest rates. By inputting the amount they can save each month, the tool calculates how much they could have accrued after one or two years with a more competitive interest rate.
Advice from the Founder and CEO of Plum
Victor Trokoudes, the founder and CEO of Plum, encourages people to start saving now, even if it's just a small amount. He suggests that even £20 a month can add up to close to £500 in just two years, without considering any interest earned. He also advises against treating what's left at the end of the month as extra spending money and emphasizes the importance of knowing when to save and when to spend.
Short-Term Vs Long-Term Savings
The study revealed that only 39% of respondents consider themselves savvy savers. They are slightly better at putting money aside for short-term goals rather than long-term ones. Additionally, 27% of those surveyed stated that if they're not actively saving for a specific goal, they are more likely to spend any available funds left over at the end of the month.
Misconceptions about Interest Rates and Savings
According to the study, 31% of respondents believe that it's not possible to get a high rate of interest unless they lock their money away for at least a year. However, 37% of those polled are currently saving for something, including a holiday or simply for a rainy day. Only 14% of respondents know what a Money Market Fund is, which is an alternative to traditional savings accounts that focuses on short-term, low-risk investments with interest rates that closely reflect central bank rates.
Setting Specific Savings Goals
The founder of Plum, Victor Trokoudes, suggests that setting specific savings goals can help motivate people to save. The study found that the top things people are currently saving for are a holiday, a rainy day, and retirement. However, there are also people saving for things like a new car, a home renovation, or clearing debts.
Conclusion
While many Brits may feel that saving small amounts is not worth it, experts encourage people to start saving now, no matter how little they can set aside. With tools like Plum Interest, even a few pounds can grow into a substantial amount over time. By setting specific savings goals, individuals can find the motivation to save and achieve their financial objectives.
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