How Much Should I Have in my Savings Account?

Whether it’s in a piggy bank or an easy access savings account, we’re all encouraged to put aside some money for the future. But between paying our rent or mortgage, as well as bills, food and any number of other regular outgoings, it can be tricky to set aside enough money each month to grow a healthy-sized ‘nest egg’.

We often think of saving money as a way to prepare for a big life event or purchase, such as buying a first home, a wedding, our children’s education or even a new car. We don’t often consider, or want to consider, the amount of savings we should have to simply ‘fall back on’ in the event of a financial emergency. So in this blog we’re going to ask the age-old question, regardless of what you’re saving for, just how much should you have as an ‘emergency fund’ in your savings account?

How much do most people have in their savings account?

According to the 2017 Executive Summary of ‘Deadline to Breadline’ research conducted by Legal & General*, more than a quarter (26%) of families reported that the amount of money they currently have in their savings would only cover them for a week, maybe even less. So, why is this the case?

On average, UK workers have little over £6,500 in savings yet believe they would need an added £9,830 to feel financially secure. This is because we would need a healthy chunk of savings under our belts in order to keep up with regular monthly outgoings, and to keep us away from the ‘breadline’ before a long-term solution can be found.

The Deadline to Breadline research also revealed that nearly a quarter of people do not save any of their income each month. In fact, 30% of UK employees* have no financial back-up in place at all. So, if you’re concerned that you haven’t been setting any money aside, you’re not alone – but it’s never too late to start building that financial safety net for yourself and your family.

How much should I have in my Savings Account?

Legal & General’s research tells us that the average UK employee only has enough savings to last 32 days.* This means that if a regular income happens to stop because of severely unfortunate circumstances, most people’s savings could only support them for just over a month.

The Money Advice Service recommends that you save at least three month’s essential outgoings in an instant savings account, which of course, is a different amount for everyone. However, Legal & General have created a Deadline to Breadline Calculator**, which will tell you just how long your current amount of savings would last you – giving you a clearer idea of how much more you should add, or if you’re just starting out, what your personal emergency fund savings goal would be.


How do I make the most of my savings?

To begin saving towards an emergency fund, you may find it wise to choose a type of regular savings account that offers you immediate access without a financial penalty - such as a Cash ISA.

A Cash ISA is a tax-efficient way to save your money as you can save a set amount each year, without paying any tax on the interest that you accrue. For the 2018/2019 tax year, the tax-free ISA allowance is £20,000. For more information, take a look at our guide to Cash ISAs.

We hope you’ve found this blog useful, and you’re feeling a little more confident with how much money you should always have in your savings account. It’s not possible to predict the future, however, it is possible to make plans for it. Having an amount of money tucked away for an unexpected change in your circumstances is a wise place to start.

If you would like to find out more about our full range of savings accounts and our interest rates, or to make an application in person to open a savings account with us, call our Savings team on 0345 734 4345 or book an appointment at your local branch.