Which? is calling on the Government to introduce a national savings strategy in 2015 as we find a third of people are planning to save less in the coming months.
The latest findings from the Which? Consumer Insight Tracker show that while nearly half (49%) are worried about their level of savings, a third of people (33%) are planning to save less in the coming months and just one in seven (14%) say they plan to add to their savings in the next year. This is despite the number of people who describe the UK economy as good more than tripling since 2012, rising from 8% to 25% and more than a quarter (28%) now saying they expect their finances to improve in the next year.
We found a quarter of people (24%) have no savings at all. Although not everyone can afford to save more or may be prioritising paying down debts, we previously identified that around 14 million people could be encouraged to save more. Of these approximately 2.5 million don’t save but could afford to.
As the economy turns a corner, we’re calling on the Government to do more to support better savings habits next year and by doing so help households that can afford to save improve their ability to cope with financial shocks. In 2015 we want to see a national savings strategy introduced, to be developed with the financial services industry, employers and consumer groups.
Which? executive director, Richard Lloyd, said:
“Not saving enough leaves people more vulnerable to financial shocks. As the economy picks up, the Government must act to develop a national savings strategy.
“With half the population worried about the size of their savings pot, we also need to see banks and building societies play their part by scrapping the savings trap and freeing savers from poor value accounts.”
Our Scrap the Savings Trap campaign, supported by more than 52,000 people, also calls for banks and building societies to do more to help consumers get the most from their savings, including not letting customers’ money languish in sub-standard savings accounts. We also want them to make ISA switching easier and stop leaving customers in the dark about the best return on their savings.
Our analysis of the latest Office for National Statistics data shows that the proportion of households saving fell from 15% to 10% between 2003/04 and 2012, and the average amount saved per week has decreased to just £23. This analysis also found:
· In the highest 20% income households (£70,420 on average) 19% saved every week, down from 29% in 2003/4. On average they saved £46 a week.
· For the fourth income households (£40,852 on average), 15% saved every week down from 21% in 2003/4. On average they saved £17 a week.
· In the middle income households (£27,764 on average), 9% saved every week, down from 13 % in 2003/4. On average they saved £17 a week.
· In the second income households (£19,630 on average), 6% saved every week– the same proportion as in 2003/4. On average they saved £6 a week.
· For those in the lowest income households (£12,633 on average), just 2% saved every week, down from 3% in 2003/4 – in this time the percentage has never been higher than 4%. On average they saved £7 a week.
Notes to editors:
1. People can join the 52,000 people already signed up to our Scrap the Savings Trap campaign here.
2. Methodology: Populus, on behalf of Which?, interviewed a representative sample of 2,104 UK adults online between 14th and 16th November 2014. Data were weighted to be demographically representative of all UK adults. Which? tracks consumer attitudes towards household finances each month and data is compared to November 2012. See https://consumerinsight.
3. Methodology: Based on secondary analysis of the ONS’ Living Costs and Food Survey (LCFS) data 2003/04 to 2012. Around 6,000 households per year kept detailed diaries of their spending and savings over a two week period, and participated in a household interview. Average £ values saved are medians for those survey participants who reported to have saved any amount greater than £0. All £ values are presented in 2012 prices (deflated by overall CPI). Income quintiles (and medians for each group) were also calculated from the LCFS data.
4. Which? has previously identified three main behaviours that are strongly linked to successful saving:
- Saving regularly each month – this is crucial to building and maintaining a three-month savings buffer.
- Saving for a rainy day – saving a regular amount is more successful than saving towards a specific goal like a holiday or car.
- Keeping savings separate from other money – those with a savings buffer are more likely to have a specific savings product which means it feels like a separate ‘pot’ and they are less likely to dip into it.