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A recent survey has shown that 40 per cent of British people can survive for six months or more if they lost their jobs and had to rely on their savings. It also found that 40 per cent can only last for one month. So with the two ends of the spectrum making up the majority of British people, how long can you really survive?
Start saving early
The cold, hard truth of the matter is that if you don't save, you could find yourself in dire financial circumstances. While it can be difficult to save, it can also be a lifesaver later on. Unexpected expenses crop up and having that extra cash put aside can make the world of difference. Imagine if you haven't bothered to save anything and you suddenly have a problem with your car. It could cost you hundreds, or even thousands of pounds to get it fixed, leaving you in a difficult situation. With various other costs coming out of your account each month, you could find yourself struggling to pay your rent or your mortgage.Attempting to save anything is better than nothing. Even if you are only able to put away a little bit each month, it all adds up in the long run. The earlier you can start saving, the better in the long-term. While it might not sound like something you want to think about when you land your first proper job, saving when you're young can make for a very enjoyable retirement later on.
In order to calculate how much you can afford to save each month, you must examine your income against your monthly spend. Money Dashboard provides a money manager that's free to use and can calculate how much you spend each month, and how much of your income you can afford to save or invest. You'll also be able to see areas where you are overspending and can cut back for additional savings.
If you have been able to save up some cash over the years, it might be worth considering various investments for it. If your money is just sitting in a regular bank account, it may not generate a huge amount of interest so you could consider a longer term savings account, or a stocks and shares ISA instead. If you decide to do this, you need to be aware that there may be restrictions on when you can get hold of your money. If you don't expect to need it any time soon, this is an effective way of saving money. It may be worth having some extra cash put in an instant access account though, to cover you for any unexpected emergencies.If you choose to invest in a stocks & shares ISA, there is potential for growth over the investment term. If you are happy to invest your money for the mid to long-term, these type of investments tend to have the biggest rewards when compared to shorter term investments. Paying into a pension is something else that you could consider. Your employer may offer a scheme which they pay into alongside your own contributions. The contributions might seem like an unnecessary pain while you are younger but when you come to retire, it will be a welcome relief to have some extra money coming in.About the Author: Lauren Sutton is brand journalist who writes on a variety of topics for UK businesses, including Foresters Friendly Society.