Saving money for rainy days makes perfect sense, but unfortunately for many households, everyday expenses render such plans virtually impossible. For low-income people, the UK government has launched the much-anticipated and postponed Help-to-Save program with the ambitious goal of assisting those who qualify, by giving them a financial incentive of 50p for every £1 saved.
The Ultimate Incentive to Start Saving
High street banks offer dismal interests on savings bonds, which effectively make no difference and barely cover inflation. By offering a 50% bonus on savings, the government hopes that the Help-to-Save program will provide low-income individuals with the motivation to sign up. The cost for the Treasury is estimated at £255m by 2023, while individuals can receive a maximum of £1,200 for those that save up to £2,400.
This added incentive not only helps people save more, but also provides them with additional income that can make a difference in the average household. Encouraging more people to have money saved greatly reduces the risk of falling into problem debt, which not only helps the participating individuals, but it is also beneficial to the economy. Labour members of Parliament welcomed the incentives, but remain critical to the cuts made to welfare. They feel that the government gives back only a fraction of the money it strips away from those who need it most.
Who Qualifies for the Help-to-Save Program?
Low-income individuals can start building up a rainy-day fund immediately by depositing a maximum of £50 per month. The goal is to assist those who can’t afford to save, so the seemingly low sum makes sense. They must open an account online and load it with money whenever they can afford it, to have the amount matched by 50%. Those who took part in the pilot program are expected to be the first to sign up for the fully-fledged scheme, since they had the chance to appreciate the advantages first-hand.