Study could improve sleep while saving small amounts of money

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• Author, Kevin Peachey
• Function, Cost of Living Correspondent

• July 10, 2024

Saving money regularly could help improve your sleep, a new report suggests.

Setting aside a monthly amount, however small, also helped people relax and be more optimistic about the future, according to the study by academics at the University of Bristol.

They said regular savers with low incomes have similar levels of life satisfaction to wealthier non-savers.

Research suggests that a quarter of UK adults have savings of less than £100.

Saving money has been difficult in recent years, with bills and food prices rising sharply, although interest rates paid by banks and credit unions have improved.

It is estimated that six in 10 people have a savings habit, and charities argue that setting aside money – even on a small income – improves financial resilience.

Now, a report from the Centre for Personal Finance Research at the University of Bristol suggests that saving regularly leads to greater life satisfaction, even if only a small amount is set aside.

The report suggested this was a result of being less anxious about money, less likely to have debt problems or being better able to deal with unexpected events.

The picture is relatively complex, with other factors at play, including whether savings have already been accumulated and changes in circumstances for different age groups.

The researchers considered several studies, including one that tracked the savings of thousands of people over a 10-year period.

They suggested an improvement in life satisfaction when saving, but also a loss when not saving.

However, other life events had a greater impact. For example, moving house or getting married improved mental well-being to a greater extent. Losing a job or having children created a relatively larger mental well-being deficit.

Returns are expected to fall

Interest rates paid by savings providers have improved during a period of higher interest rates.

Currently, the average easy-access account pays 3.12% interest, according to financial information service Moneyfacts. Locking money away for a year brings an average return of 4.65%.

However, returns are expected to become less generous when the Bank of England cuts benchmark interest rates, with a first drop likely in August.

Andrew Gall, head of savings at the Building Societies Association, which commissioned the research alongside Yorkshire Building Society, said: “While we recognise that some people are simply not in a position to save right now, the findings of this report show why everyone should be encouraged to save a little, if they can, when they can.”

The report said providers should make savings accounts simple, flexible and use incentives to get customers to save.

What are my savings options?

• As a saver, you can shop around for the best account for you
• Loyalty often doesn’t pay off, because old savings accounts have some of the worst interest rates
• Savings products are offered by a variety of providers, not just the big banks. The best deal isn’t the same for everyone – it depends on your circumstances.
• Higher interest rates are offered if you lock your money away for longer, but this doesn’t suit everyone’s lifestyle.
• Charities say it’s important to try to keep some savings, no matter how tight your budget, to help cover any unexpected costs.

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