15th August 2014
Around 14 million Britons could and should be putting away more each month into a savings account.
A report by consumer group Which? has identified 11.5 million who struggle to save regularly and another 2.5 million who don’t save but could afford to.
Which? said there are 14 million people Which? has identified as either ‘struggling savers’ or ‘non-savers who could save’.
Struggling savers make up nearly a quarter, 23%, of the population and struggle to save regularly and see saving as something they do if their budget allows. Non-savers make up 5%, or 2.5 million, of the population and Which? said they are different from other groups of non-savers.
Although 84% of these non-savers say they can’t afford to put money aside they also cite other reasons for not saving, such as preferring to spend money on things they want now or don’t think saving is worthwhile.
The government, and sensible financial practice, recommends households have savings that will cover three months of essential spending like mortgage payments, bills and food. However, 41% of people say they couldn’t last three months without their main source of income and unsurprisingly households without the three-month buffer are more likely to have defaulted on a payment in the last month or used high-cost credit like payday loans.
Half of people in the UK are unhappy with their level of household savings, according to Which?, and a quarter have no savings at all.
While many believe they do not earn enough to save, one in 10 of those who saved every month in the past year were low income earners, the same proportion of monthly savers as those earning the most.
If you want to become a saver, Which? has identified three main behaviours of people who save successfully:
Individuals who follow these rules are ‘habitual savers’ and 55% of habitual savers have the recommended three months savings buffer.
Which? is now calling on the government to work with the industry and employers to develop a national savings strategy to help the UK save more.
‘With half the population unhappy with their level of savings, and a financial buffer so crucial to the resilience of households and the wider economy, we’re calling on the government to help get the UK saving,’ said Which? executive director Richard Lloyd.
‘We’ve looked at the most successful savers and identified the behaviours that the industry and government should be encouraging to help those who can afford to save, save more.’
David Lascelles, savings expert at Scottish Widows, said the savings industry and government must work together to halt the widening gap between savers and non-savers.
‘Our own research supports [the Which?] findings, telling us that although ‘habitual savers’ are managing to put away more for a rainy day, the total number of people saving has fallen and despite improvements to the economy, one in five people in the UK now have no savings at all,’ he said.
‘It is vital that we tackle this culture of short-termism and make people aware of the benefits of putting aside even just a small amount each month. Having a plan for the future can make the present feel less stressful when people know they have a buffer in place for any unexpected events that may come their way.’