Sleep could be boosted by saving small amounts

Saving money regularly can help improve sleep, a new report suggests.

Putting a monthly amount aside, however small the sum, also helped people to relax and be more optimistic about the future, the study by academics at Bristol University found.

Regular savers on low incomes have similar life satisfaction levels as richer non-savers, they said.

A quarter of UK adults have savings of less than £100, surveys have suggested.

Saving money has been tough in recent years, owing to sharply rising bills and food prices - even though the interest paid by banks and building societies has improved.

An estimated six in 10 people have a savings habit, and charities argue that setting money aside - even when on a small income - improves financial resilience.

Now the report by Bristol University's Personal Finance Research Centre has suggested regular saving leads to improved life satisfaction, even if only a small amount is set aside.

The report suggested this was the result of being less anxious about money, less likely to experience problem debt, or being better able to cope with unexpected events.

The picture is relatively complex, with other factors at play including whether savings had already been built up, and changing circumstances for different age groups.

Researchers considered various studies, including one tracking the savings of thousands of people over a 10-year period.

They suggested an improvement in life satisfaction from saving, but also a detriment when not saving.

However, other life events had a bigger impact. For example, moving home or getting married improved mental wellbeing to a greater extent. Losing a job or having children created a relatively larger mental wellbeing deficit.

Interest rates paid by savings providers have improved during a period of higher interest rates.

At present, the average easy-access account pays interest of 3.12%, according to the financial information service Moneyfacts. Locking money away for a year carries an average return of 4.65%.

However, returns are expected to become less generous when the Bank of England reduces benchmark interest rates. A first drop could come in August.

Andrew Gall, head of savings at the Building Societies Association, which commissioned the research along with Yorkshire Building Society, said: “While we appreciate that some people simply won’t be in a position to save right now, these report findings show why everyone should be encouraged to save a little, if they can, when they can."

The report said providers should make savings accounts simple, flexible and use incentives to get customers to save.

• As a saver, you can shop around for the best account for you
• Loyalty often doesn't pay, because old savings accounts have among the worst interest rates
• Savings products are offered by a range of providers, not just the big banks. The best deal is not the same for everyone - it depends on your circumstances
• Higher interest rates are offered if you lock your money away for longer, but that will not suit everyone's lifestyle
• Charities say it is important to try to keep some savings, however tight your budget, to help cover any unexpected costs

There is a guide to different savings accounts, and what to think about on the government-backed, independent MoneyHelper website.

• What are interest rates? A quick guide