Debt `stopped people saving in 2009`

29 January 2010

Savers managed to increase their savings levels by just £38 on average in 2009, according to ING, with many people instead focusing on paying down debt.

The savings provider claimed that the average person holds £2,205 in savings - the equivalent of 1.7 times their monthly take-home pay. Most financial experts agree that savers should have the equivalent of three months` salary put away to protect against debt and other financial emergencies.

ING said that savings levels actually rose by £112 during the final quarter of 2009, but this was more than offset by the £149 withdrawn from savings accounts in the second quarter.

A debt expert at Think Money said: "These figures really demonstrate the difficulty many people faced at the height of the economic crisis. Savings are important for protecting against potential debt problems, but it seems existing debts were already a pressure for many people.

"It often makes sense to pay off problem debts before putting money into savings, because debt interest grows more quickly. Anyone having trouble with their debts should speak with a debt adviser about how to improve their situation."

Tags: debt, savings, ING, emergency fund, paying down debt, paying off debt

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