Uk News How to boost your savings as consumers face losing thousands of pounds through inflation United Kingdom news
PremierLeague-News.Com - i's top tips as new analysis shows purchasing power of your cash in the bank could plummet
PremierLeague-News.Com - Breaking Sport Transfer News ! The purchasing power of cash-based savings will plunge if current high levels of inflation are sustained, new analysis shows.Consumers could find themselves down thousands of pounds if the situation continues, research from Standard Life reveals.UK inflation soared to 9.1 per cent in May, with predictions it will hit 11 per cent at its peak this year, the highest UK inflation figure since 1982.Consumers have had to contend with rising household energy bills, the rocketing cost of food and transport, and the decreasing purchasing power of their money, amid the cost of living crisis.Now, Standard Life’s analysis reveals just how much savers could be missing out on as a result.It found that £10,000 in savings earning 1.5 per cent in interest would drop in buying power to just £8,910 after a two-year period of 7 per cent inflation.However, if inflation was 2 per cent, the Bank of England’s target level, after two years its purchasing power would be £9,894.More from Saving and BankingNationwide's current account interest rate rises to 5%, as banks battle to attract savers22 June, 2022Why interest rates rise with inflation, and how Bank of England aims to ease price rises22 June, 2022How I Manage My Money: The female boss of an online gift shop whose income varies from £400 to £2k a month22 June, 2022If inflation rose to 10 per cent for two years, the first year of savings would reduce to £9,135 whilst the second year would reduce to just £8,345.This means savers are at risk of seeing their money erode in value quickly if the current situation lasts.Jenny Holt, managing director for customer savings and investments at Standard Life, said: “Most people have been feeling the effects of rising prices over the last few months, as fuel, energy and food costs surge.“Unfortunately, the Bank of England is predicting inflation rates will peak later in the year, potentially reaching 11 per cent, and this not only affects your regular income, but hard-earned cash-based savings will be impacted too as its purchasing power is reduced.“It’s therefore especially important to make sure that the money you have saved and can save is working as hard as it can for you and your future.”How much inflation could damage savings for consumers (Standard Life)How to make your savings work harder1. Revisit your financial goalsAs you start to notice the effects of increased prices, you might find that your current financial goals could take longer to reach than originally planned, or they might need to be adjusted. So now could be a prime time to revisit your plans and consider if they need to change.2. Have a direct debit detoxMany of us rack up memberships and subscriptions that we could probably live without, so have a think whether you could cancel them or shop around for a better deal. You might be surprised at how much money you could save.
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. Prioritise your spendingAlthough times are tough, it’s worth seeing if you can put off purchases you’d planned for a while longer. If it’s not essential, you might be better waiting until you’re confident that making that purchase now won’t impact your standard of living. However, if you’ve been thinking about making a big purchase, such as a car or a required home improvement, and you have the money to do so, you might find you’d be better off going ahead now rather than waiting until later when prices could be even higher and the pound in your pocket worth less.4. Try to clear any outstanding debtWhen inflation rises, interest rates are generally increased to help control the economy. If you have any variable rate debt, you might find that your regular payments go up as a result. It’s best to review debt arrangements as a priority, making sure you are reducing interest being paid as much as possible.5. Make the most of tax efficient savingsYou might find there are different benefits you could get depending on how you save your money, which could make the most of what you’ve got. It’s worth bearing in mind that you get tax benefits on pension payments, effectively meaning it costs less to save more into a pension plan. So even if you’re focused on short-term finances at the moment, it’s important to continue contributing to your pension: time in market is one of the most important factors in investing, and if you choose to stop contributing you may miss out on valuable contributions from your employer.However, remember that you can’t access your pension savings until you’re aged 55 (rising to 57 in 2028). If you want to access your money before 55, stocks and shares ISAs are a great, tax-efficient way to save for medium or long-term goals without having to tie up your money. Or you could consider a cash ISA for shorter-term goals like rainy day funds but be mindful of the impact of inflation on the value of these.6. Consider making investments.If you want to give your savings the opportunity to grow in line with the rate of inflation or beating it then one of the best ways to do this is to invest over the medium to long term, which is generally five years or more. Your pension plan, stocks and shares ISA and any other investments will offer investment options that have the potential to grow your money over the medium to long term. For more information on this, you can speak to your bank or provider, or visit the Government’s free MoneyHelper service.
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