A dream holiday, a new car or a deposit for a first home may be among the things we aspire to save for, but new research suggests that, for many people, the main reason for putting money aside is much more immediate: preparing for the unexpected.
A three-year programme of research by the University of Bristol’s Personal Finance Research Centre has explored the role savings play in people’s lives, from financial wellbeing to longer-term security and the reasons people choose to save.
Its latest findings show that savings are increasingly about providing a financial cushion when life does not go to plan.
Two in five savers (41%) say they are putting money aside for unexpected or irregular costs. A broken boiler, car repair, vet’s bill or surprise household expense can all place pressure on household finances, and having some money set aside can help people deal with these moments without an unexpected bill becoming a wider financial emergency.
For many, this sense of security is one of the greatest benefits of saving. Almost six in ten current savers (59%) say that having savings gives them a sense of security and protection against emergencies.
Even modest savings can help
One of the most important messages to emerge from the University of Bristol’s research is that building a savings pot does not have to mean putting aside large sums of money every month.
Previous research in the programme found that households with at least £2,000 in savings were almost 60% less likely to later fall behind on household bills. Importantly, the research also found that even lower levels of savings could reduce the risk of financial hardship.
That is why developing a regular savings habit can be so valuable. Starting with an amount that feels affordable and building from there can help create a financial buffer over time.
The research has also highlighted wider benefits associated with regular saving, including improved wellbeing, greater optimism about the future and better sleep.
Saving can still support your ambitions
Of course, having a savings buffer does not mean giving up on bigger ambitions.
The same savings pot may help us prepare for the unexpected while also providing a foundation for future goals, whether that is a family holiday, home improvements, a first home or something else entirely.
The University of Bristol’s research suggests that basic savings can provide an important first step towards longer-term financial goals and other financial products, helping people build confidence in managing and setting money aside.
The challenge of finding money to save
For many households, however, the biggest challenge is not understanding the value of saving , it is simply having enough money left after essential costs have been paid.
The latest research found that six in ten adults (60%) believe they could save more if they had money remaining after paying for essentials.
This is a reminder that there is no single approach to saving that works for everyone. What matters is finding a savings habit that fits your own circumstances.
For some, that may mean setting aside a regular amount each month. For others, it could mean saving smaller amounts when they become available. The important thing is that even a modest savings buffer can provide greater reassurance when an unexpected expense comes along.
Building stronger savings habits
At Swansea Building Society, we understand that people save for many different reasons. Some are working towards a particular goal, while others simply want the reassurance of knowing they have money set aside should they need it.
Whether you are starting from scratch, building an emergency fund or working towards a longer-term ambition, saving what you can afford on a regular basis can help build both financial resilience and confidence over time.
We offer a range of savings accounts designed to suit different circumstances and goals. Whether you are starting to build a savings habit, putting money aside for the unexpected or working towards a longer-term ambition, you can explore our range of savings accounts to find an option that is right for you.
The key message from the University of Bristol’s research is a simple one: savings do not have to be about getting rich or reaching one particular destination. Sometimes, having money set aside is simply about knowing that when life throws an unexpected expense your way, you have something to fall back on.
The research
The research was conducted by the University of Bristol’s Personal Finance Research Centre as part of a three-year programme exploring the role of savings in people’s lives. The latest research, “Understanding the reasons for and barriers to saving”, was commissioned by the Building Societies Association and is based on survey data from 4,000 UK adults.