UK individuals show little enthusiasm for saving

The percentage of people’s take-home pay that is saved has remained fairly stagnant, according to a new study by National Savings & Investments (NS&I).

The proportion of income saved edged down to 14.22 per cent in 2009, from 14.83 per cent in 2005.

The figures appear to highlight a sense of malaise amongst individuals towards the idea of saving for a rainy day in spite of the current problems with the economy and the increased threat of redundancy amongst employees.

Regular savers continue to consistently set aside more money than most, allocating almost half of their take-home income into a savings pot.

But although the percentage of people saving regularly each month rate has edged higher, from 45 per cent in 2005 to 47 per cent in 2009, NS&I considers the increase quite small considering the current economic climate.

Tim Mack of NS&I said: “Many people are now putting a few more pounds away each month for greater peace of mind. But when expressed as a percentage of monthly income saved, it is evident that Britons don’t seem to have made saving any more of a priority in 2009 than they have over the past five years, despite the economic downtown.”

However, there are also very few incentives to save. With the bank rate hovering at 0.5 per cent, Britons have opened Individual savings accounts or moved into equities and higher-yielding investments instead.

Andrew Hagger of Moneynet.co.uk said people have also opted to pay down debt instead.

“Debt is costing them an awful lot more. They feel better paying off their mortgage or credit card. Whereas the fixed-rate savings was a 7 per cent a year ago, it’s now 3.7, half of what it was before.”

Mr Hagger said that while saving is important as it prevents over-indebtedness, there are simply too few incentives to put money aside when it could be used elsewhere.

“Paying off debt makes financial sense. There’s a big differential between putting money in a 3 per cent savings account versus a credit card charging nearly 20 per cent interest.”