In today’s challenging economy, it’s difficult to make ends meet. With rising expenses, inflation and uncertain job prospects, we could all do with extra money.
According to the FCA’s Cash Savings Market Review 2023, 3 in 10 adults (30% or 15.9 million people) don’t have a savings account. While it might feel like there’s never enough left over, remember that setting aside even a small amount of money regularly can have a significant impact on your future financial security.
Let’s explore the reasons why saving money is such an important habit.
Financial security
Saving money is about more than just having the ability to meet short-term financial goals. It’s about achieving financial security where you can make decisions based on your desires and aspirations rather than relying on external sources.
For example, saving money can help you reach important financial goals, such as buying a home or car. By saving a deposit, you can reduce the amount you need to borrow, resulting in lower interest rates and more manageable monthly payments.
For many people, owning their own home or having their own transport is an important step in their financial stability; giving them and their family a secure footing from which to build.
A safety net during hardships
Life will always have its ups and downs, yet all too often we’re unprepared for facing periods of difficulty. Saving money helps create a financial cushion that can provide a safety net during tough times. Whether it’s an unexpected expense like a car repair, fixing a broken appliance, or the loss of a job, having a rainy-day fund to fall back on can offer peace of mind.
Unforeseen emergencies can arise at any time and having cash on hand can help alleviate the pressure and stress. By having funds readily available, you can avoid turning to high-interest credit cards or loans, which can trap you in a cycle of debt.
Relieve financial stress
The link between money and mental health is well-known. Worrying about money can affect our mental wellbeing and our ability to manage money can be affected by a mental health issue. Sometimes, the two factors can become so intertwined that both can deteriorate alongside each other. 
Being under increased financial pressure can often have a knock-on effect, resulting in lower levels of overall wellbeing. According to the Office for National Statistics (ONS), half of adults (49%) who reported that they were behind on energy bills between 14 September and 8 January 2023 also reported high levels of anxiety, compared with a third of those who were not behind (33%).
Unfortunately, issues with mental health can be unpredictable and the circumstances leading to periods of poor mental health can arise without warning. It’s possible, however, to position your financial circumstances so that you can be more resilient.
Having the knowledge that you have cash funds available should you need to use them gives you a greater number of options when faced with an unexpected bill or a period of reduced income, therefore reducing the chance of spiralling into debt.
Prepare for the future
Retirement is an important milestone in everyone’s life, and it’s never too early to start planning. According to research, nine in ten workers are not saving enough to have a good standard of living in retirement.
By saving a portion of your income, you can accumulate funds that will serve as your income during retirement. Whether it’s through employer-based pensions or individual savings accounts, the more time you have to invest, the more money you can potentially accumulate. Every little helps!
Because long-term savings are often left untouched for many years, compound interest can often come into play. This means the interest you make on savings can then go back into your savings pot for you to earn further interest.
While it’s undeniably the case that starting to save early will stand you in good stead throughout your life, it’s also true that it’s never too late to save. By taking the first step today rather than waiting any longer, you can begin to take advantage of all the benefits of saving sooner and reduce the likelihood of making greater sacrifices down the line.
Starting your savings journey
As with many aspects of personal finance, taking the first step can sometimes be the hardest task. You might wish to start by setting realistic savings goals, such as reaching a specific monetary amount. 
Tracking your day-to-day or month-to-month spending is a good place to start your savings journey as you’ll be able to decide how much of your income you’ll aim to transfer into savings. Make sure to include any fixed expenses, such as rent, utilities, and groceries, as well as discretionary spending, such as entertainment and dining out into your budget.
This practice may also enable you to identify any areas of spending where you may be able to reduce costs – reviewing existing household bills and negotiating better deals on services or subscriptions. Alternatively, you might choose to explore opportunities to increase your income through ‘side hustles’ or taking on extra shifts at your current workplace. The extra money you earn can go directly into your savings.
Once you have decided on your savings goal and a sensible amount to save, taking advantage of automatic transfers often helps people to stick to their savings objectives. By setting up a standing order, you know that the money will be taken, and you don’t have to worry about it. This can be a huge help when it comes to staying on track with savings goals.
Remember that making some short-term sacrifices by reducing unnecessary expenses can soon start to pay off. After a few months of saving, it might be surprising how quickly your savings have built up. This will help you have a clear vision of what can be achieved if you are able to stay focused and motivated on saving.
Start saving with GMB
Saving money is crucial for a more secure financial future. By setting aside a small amount on a regular basis, it’s easier to build a safety net, save for retirement and pursue your dreams.
Remember, it’s never too late to start saving money and take steps towards achieving your financial goals. Make it a priority to save money today and start building a better future for yourself.
GMB members have access to a variety of savings accounts. Learn more.
Our easy access savings accounts are simple and straightforward. Any funds saved with us up to the value of £85,000 are fully protected by the Financial Services Compensation Scheme (FSCS).
Sources
Cash Savings Market Review 2023
How are financial pressures affecting people in Great Britain?
Millions face gloomy retirement as 90% of young save too little in pension