Going on holiday is a popular goal, with about 31% of those surveyed in the Consumer Savings Monitor saying they were putting money aside to get away. Home improvements were also high on the list, cited by 14%.
It can be easier to save when you have a goal
Behavioural economists know that many people find it easier to save if they have a goal in mind. Having a particular saving goal can help foster the discipline needed to put money aside on a regular basis. Tracking progress and hitting significant milestones is part of the process. And once the goal is met, savers can decide a new cause to put money aside for. The goals set may change over time, as savers lives and money habits grow and change.
Building an "emergency buffer" is an important goal
The study found ordinary Britons each had about £2,205 in readily accessible cash and deposits. The figure was the equivalent of just 1.7 months’ take-home pay, the report said. But since it takes an average of five months to get back into work, it was “clear many people were ill-prepared for the risk of unemployment”.
ING group chief economist Mark Cliffe said an important savings goal was to build an emergency buffer of between three and six months’ pay – depending on personal circumstances – to call on in case of emergency.
The monitor took a median average of savings in a bid to give an accurate figure for ordinary savers. Some other measures were distorted as the wealthiest 5% of the UK population owned a third of total savings.