Now that the dust is settling on the financial markets, people are waking up to the fact that they, like the banks, need to save more for the bad times.

But despite the financial shock of the last 18 months, data for the last five years shows that in general Britons have not made savings any more of a priority, according to National Savings & Investments.

The data shows that in 2009, while the average monthly amount Britons save per head has increased to its highest recorded figure – £83.87, up from £70.23 in 2005 – the average amount that people say they are saving as a percentage of their take-home income has remained fairly constant for the last five years, at just over 6%.

Essentially, people are not diverting a larger enough proportion of their take-home income to savings, despite the recent economic downturn, which has created a greater need amongst many to build up emergency savings.

This can all be solved with an offset loan. It encourages people to save money by asking them to pay back less towards their mortgages the more they save into it. making money from saving is surely the best incentive and will invariably incentivise saving even more money.

NS&I says: “Many people are now putting a few more pounds away each month for greater peace of mind. But when expressed as a percentage of monthly income saved, it is evident that Britons don’t seem to have made saving any more of a priority in 2009 than they have over the past five years, despite the economic downturn.

“Taking some time to review how much unnecessary expenditure could be cut back to help focus income on what we really want and need, encourages people to develop a good savings habit.”

And while NS&I has found that the financial downturn has encouraged many of us to set money aside to act as a financial safety cushion in the event of the unexpected, too many are forgetting about other major expenses that occur at different life stages where we may need to draw on savings, or credit if no other funds are available.

NS&I says: “We should be looking at increasing the amounts we are saving for such expenses, rather than diverting money from savings set aside in case of an emergency.”

Offset lets you save for an emergency, a rainy day, your children, your grandchildren or your own retirement. It can help you pay for a new car, home renovations or even a new holiday – you are in charge of your money with an offset and it gives you the flexibility you need to do what you want, when you want.

SOURCE: NS&I, 04/12/09

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