Families without savings

Andrew Hagger of Moneynet.co.uk comments on the research from Abbey Savings that 28 per cent of parents have no savings and a further 20% have less than £1,000 to fall back on.

With unemployment rising sharply and interest rates at a much lower level than 12 months ago, it's no surprise that parents are saving less. However, putting a little cash aside each month, rather than continually reaching for the plastic is a habit that UK households need to rediscover.

With the UK on a seemingly endless credit binge for almost 10 years before the credit crunch struck, it had become the norm to rely on plastic and personal loans and it's been hard for people to break out of the ‘buy now, worry about it later' mindset.

Unless you make a determined effort to start saving, it's one of those things that's easy to put off and never get round to doing anything about.

Whilst there are some attractive looking rates in excess of 5% for fixed rate savings accounts for 4 or 5 year terms, these are of no use to someone looking to start their first nest egg. With many instant access savings accounts paying miserly rates, many at 1% or lower, there's no incentive to put money into this type of account either.

A regular saver account is the ideal starter account for savers because it gives you the discipline to save something every month for 12 months and sees you rewarded with a worthwhile rate of interest.

As well as the Abbey regular saver account, you'll also find good deals from some of the building societies - for example Norwich & Peterborough BS pays 5.00% AER and Principality BS 4.50% AER whilst Barclays pays 4.25% AER.

If you go through life without any savings behind you, as soon there's an unexpected expense such as the washing machine or car breaking down, then you'll have to resort to using your credit card or overdraft and paying interest charges that you can ill afford and which eat further into an already stretched budget.

The worrying thing is that if people are not able to save, how will they cope when mortgage rates rise from their current low levels and they are forced to find an extra chunk of money each month - it's a potential recipe for disaster and long term could lead to more serious debt problems and in some cases people going bankrupt.