Setting Aside Your Money For When You Need it Most

According to new research, many people are now relying on their savings accounts as a place to keep their extra money safe. Indeed, households are choosing to put away their extra money instead of spending it - a sign that many see the current economic downturn as a cue to save, rather than spend, their money.

A surge in attempts to save more money has led the cash value of savings of households in the UK to rise to £11.7 billion in the last quarter of 2008. The rise comes as consumers choose to change their former spending habits. In the same quarter, the sales of food and drink fell by the largest percentage in five years. Instead of spending lots of money on holidays, restaurants and electronics, many are choosing to put that money away in order to let it grow without spending it on non-essential goods.

Experts have noted that many are choosing to save because they are expecting to see a drop in their household income. Though the interest rates surrounding mortgages has decreased in recent times, this has not led many households to increase their spending on other goods.

In the final quarter of 2008, Britons alone saved £7.6bn of their incomes in savings accounts. It has also been noted that the proportion of what is saved in accounts across the nation has grown radically, and is at its highest since 2006. In addition, each household is now saving an extra £3 per month compared to what was being saved a year ago. As people borrow less money and reign in their spending, savings accounts are surfacing as a reliable option for people to save the money they might need for later.

What's more, it has been noted that the number of people choosing to save money hasn't risen, but those who do choose to save are putting away more each month. In addition to saving money, household spending also fell by close to 1 per cent, as families continue to cut down on unnecessary costs. Many experts are cheering the move, as it implies that families dealing with debt are beginning to tighten their spending habits in order to pay it off.