One in four Brits don’t see the point in saving at the end of the month – if they’ve only got a few pounds to put away, a study has found. And 12 percent believe it’s not worth putting anything less than £100 into savings – despite experts advising to start now, and start small.
The research of 2,000 adults found 57 percent struggle to find the motivation to put money aside to grow – although nine percent check their online bank accounts multiple times a day.
Following the findings, smart money app Plum has created a tool to launch Plum Interest, which shows just how much those few pounds could grow over time thanks to higher interest rates.
By inputting the small amount you are able to set aside each month, the tool will show you how much you may have accrued after a year, and two years, with a more competitive rate.
Victor Trokoudes, founder and CEO of the saving and investment app, said: “If you’ve been putting money away for more than five years, that’s excellent – but not everyone has the same motivation, especially if we’re talking small amounts of money left at the end of the month.
“But there really is no time like the present – even £20 a month, over the course of just two years, will add up to close to £500, and that’s before any interest.
“It can be tempting once you get to the end of the month to treat yourself to something, or just roll over what’s left into the new month’s expenses.
“But if there are some extra things you’d like to have in the next year or two, the savvy will typically know when to spend, and when to squirrel it away.”
The study also found only 39 percent describe themselves as savvy savers, and are slightly better at putting their funds aside for short-term goals than long-term ones.
But 27 percent reckon they’re more likely to spend any available funds left over at the end of the month if they’re not actively saving for a specific goal.
And 31 percent don’t think it’s possible to get a high rate of interest unless you lock your money away for at least a year.
However, 37 percent of those polled, via OnePoll.com, are currently putting money aside for something – including a holiday (18 percent), or simply for a rainy day (12 percent).
It also emerged that just 14 percent know what a Money Market Fund is – an increasingly popular alternative to traditional savings accounts, that focuses on short-term, low-risk investments, with interest tending to closely reflect central bank rates.
A quarter (24 percent) incorrectly believe it is something that specialises in foreign currencies – while seven percent think it’s something that allows you to change out-of-date cash for new money.
Victor Trokoudes, from Plum, added: “These days, you definitely don’t need to lock your money away for years to take advantage of higher interest rates – although some people think that you do.
“For example, putting money into a flexible alternative, like a Money Market Fund, could be a good way of reserving it for shorter term goals, especially if you think you might need to dip in from time to time.
“It doesn’t matter how small your initial investment is – with time and patience, it can grow into something more substantial in as short a period as one or two years, taking advantage while interest rates are high. But it always helps to have a specific goal in mind.”
