Households with £2,000 in savings are around 60% less likely to fall behind on household bills, according to new research from the University of Bristol’s Personal Finance Research Centre, commissioned by the Building Societies Association (BSA) for UK Savings Week.
The study, which followed thousands of UK households over a decade, provides new evidence that savings play a crucial role in protecting families from financial shocks, such as unexpected costs or income loss.
The protective power of savings
- £2,000 is a turning point
Households with this buffer have 60% lower odds of falling behind with bills and have a much lower risk of problem debt than those with little or no savings.
- One month’s income provides strong protection
Having at least this amount in savings reduces the odds of falling behind with bills by nearly 75%.
- Small amounts still matter
Those with just £200–£499 in savings are significantly less likely to face financial hardship (8%) than those with less than this amount (24%).
- A savings habit is key
Households that save consistently, regardless of the amounts, have over 70% lower odds of falling behind with their bills than non-savers.
- £10,000 is needed for people to ‘feel’ secure
Whilst smaller sums are enough to prevent hardship, there is a significant gap between actual resilience and perceived security.
Basic savings opens the door to other financial products
The research also revealed that having basic savings accounts can be a gateway to other financial products and greater financial security.
- People who had a simple savings account were significantly more likely to go on to take out ISAs, pensions or investments.
- Those who had a Cash ISA were almost twice as likely to become a homeowner, compared to those without one.
- Households with a mix of savings and investment products were five times more likely to say they were living comfortably, than those with none.
Setting a realistic goal
While the report highlights £2,000 as an important protective threshold, it also suggests that this target should not be seen as a minimum requirement. For many households, particularly those feeling the impact of rising prices, it may feel out of reach and completely unattainable.
The research shows that even a small savings pot, from as little as £200, can help reduce the risk of falling into financial difficulties, demonstrating that that the habit of saving is just as important as the amount. Setting a goal that is realistic and achievable for an individual’s personal circumstances is crucial for success. Research by the same academics last year [Link] showed that saving even small amounts regularly can also improve people’s wellbeing and help them to sleep better.
What more can be done?
The report highlights that people save for very different reasons, from short-term rainy-day funds to long-term goals like buying a home or for retirement, so savings shouldn’t be seen as money that is locked away. Promoting the idea of ‘saving to spend’ then topping them back up, can highlight the importance of using savings when needed or to realise a goal.
For those on lower incomes, products that feel rewarding, such as prize-linked savings, can help make saving more attractive. Starting early also matters, with savings education from childhood to young adulthood giving people the best chance of building strong habits that will last a lifetime.
Employers can also play a vital role too, by offering simple payroll savings that make it easy for individuals to put money aside regularly.
Andrew Gall, Head of Savings and Economics at the Building Societies Association, commented:
“Building a financial buffer is one of the best protections against life’s ups and downs. This important report shows that having £2,000 in savings can more than halve the risk of falling into financial difficulty. However, it also reminds us that even small sums make a real difference, at a time when one in ten people have no savings at all.
“We appreciate that for some families £2,000 may feel out of reach right now. But the research has demonstrated that even small, regular savings, such as £10 a month, will build resilience over time and improve people’s wellbeing.
“Just as important, the findings show how a simple savings account is often the first step to achieving longer-term financial goals. People with good savings habits are far more likely to go on to have other savings and investments, which in turn can lead to positive outcomes such as becoming a homeowner.
“And this report makes clear that there’s more we can do. From payroll savings to better financial education, there are practical steps that can help the nation have better savings habits.
“Everybody’s savings journey has to start somewhere. That’s why UK Savings Week is all about helping individuals to build a habit that works for them.”
Sara Davies, Associate Professor at the University of Bristol and part of the research team who worked on this research, commented:
“This research reaffirms the protective effect of holding a financial buffer, giving households a bit more room for manoeuvre should they face an unexpected expense or shock to their income.
“We hope that the report acts as a call to action for policymakers and those working in financial services to find new, innovative ways of supporting households – especially those on lower-incomes – to build a savings habit.”
Vicky Wales, Chief Savings Officer at Principality Building Society said:
“Saving isn’t just about pounds and pence – it’s about security, independence, and peace of mind. Saving even small amounts every month, like putting a little money aside for Christmas, a holiday or unexpected costs can help people feel more in control about the future. These simple goals make saving a meaningful life habit, not just a financial one.
At Principality, our ambition is to make more possible by helping one million people to save regularly by 2030. That’s why we’re pleased to be joining with partners to explore the wellbeing benefits everyday saving can bring.”
