Five reasons to feel optimistic about your savings

It hasn’t been easy for savers over the last 15 years. For a long time, interest rates stayed at historic low levels. And even since 2021, when they started to go up, high inflation has made it difficult to truly grow your money.

But is that changing? In 2024, the outlook appears more positive for savers. Interest rates are at a 15-year high, and the cost of living crisis is beginning to ease. That means there are some potentially rewarding ways to save and grow your money right now.

Having worked in the Skipton Savings Product team for the last few years, I’ve never been more confident than I am right now about the ways we could boost your plans.

Here are my five reasons why I believe you could feel better about your financial future.

1. Inflation continues to fall

In October 2022, inflation peaked at just over 11%. By the end of 2023, inflation stood at 3.9% and is expected to reduce even more throughout 2024.

I don’t know about you, but it has felt difficult to plan your finances too far ahead, with the costs of everyday items going up at such a fast pace these last two years. But with the rate that the cost of living is rising by now slowing down, you might find you’re able to put some money away to save for the future.

Indeed, a December 2023 global survey by Paysafe found 47% believe they will be able to save more money in 2024. How do you feel about your finances?

I'd recommend trying our Financial Fitness Tool to find out your 'money personality' and the steps you could take to get to where you want to be.

2. Interest rates have gone up

If you’ve kept your savings in the same place for a while, the chances are you can now achieve a more rewarding interest rate.

Let’s say you’ve got £10,000 in savings.

  • According to the Building Societies Association, in October 2021 the average 1 Year Fixed Rate Bond interest rate offered by banks and building societies was 0.27% AER. This would have paid you just £27 gross interest after a year.
  • In October 2023, the average 1 Year Fixed Rate Bond interest rate was 5.45% AER. This means you’d earn £545 gross interest after a year.
  • That’s 20 times more interest earned.
Alex Sitaras

I’d definitely recommend browsing our range to see if your savings could be working harder.

It’s worth keeping in mind that interest rates are forecast to start falling at the end of 2024 . This means some of the deals you can get right now might not be available forever.

September 2023 data from CACI shows there are over 6.7 million UK adults with at least £10,000 sat in current accounts paying 0% interest. This adds up to a considerable £241 billion.

Alex Sitaras – Head of Savings Products and Propositions

3. Having a financial plan is good for your mental wellbeing

February 2023 research by Money.co.uk found that 34% of UK adults have either no savings, or less than £1,000 in a savings account. Our own March 2023 survey showed the cost of living crisis is causing 35% of UK adults to think about how they could be more financially resilient.

One possible way to reduce any financial anxiety you experience is to have solid financial plans in place.

Checking your plans and seeing if you could save more could give you peace of mind that you’re in control of your finances. So, for example, when something important breaks, you know you have just-in-case savings to buy a replacement.

Since 2020, we’ve been working with Mental Health UK to better support the wellbeing of our customers, communities and our own people. If you or a loved one need help, they can provide information and support.

4. There are some great tax incentives to help boost your plans

A bar chart comparing the annual tax allowance for Pensions and ISAs.

For each of the 2023/24 and 2024/25 tax years, you’ve got an ISA allowance of £20,000 to save or invest. The returns your money makes inside an ISA are free from tax, so you get to keep more of what you make.

For longer-term goals like retirement, the amount you can pay in each year, and benefit from tax relief, has gone up from £40,000 to £60,000 (depending on your income).

And from April 2024, the lifetime allowance limit on how much you can have inside a pension, without paying tax, will be scrapped.

Pensions and ISAs are a great way to save for the future in a tax-efficient way. So it’s worth checking if you’re making the most of the opportunities you have to strengthen your plans.

If you need help with your plans, our financial advice service could be right for you.

5. Investing offers you the chance to do more with your money

Investing could help you to achieve higher returns than savings can offer over the long-term. This could make all the difference to your long-term financial future.

To be clear, investing does involve taking risk with your money. You also need to be willing to commit a part of your savings for at least five years.

For these reasons, it could be worth speaking to an expert to better understand your options.

  • We’ve offered a personalised financial advice service for over 30 years.
  • There are no upfront fees to hear our advice. You only pay a charge if you choose to act on advice.
  • Best of all, your adviser will go at your pace. Only offering recommendations you’d be comfortable considering – with no pressure to act.

Important Information

The value of your investments and any income from them may fall as well as rise and you may get back less than you invested. The tax treatment of savings and investments depends on personal circumstances. Tax rules may change in the future.

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