New research has found that almost 15m people in the UK aren’t ‘making any efforts to save for the future’, while 8m people have no savings at all. Is the ability to save becoming a luxury?
Research from Scottish Widows has found that nearly a third of us Brits have a total savings pot of less than £1,000. To add salt to the wound, over half of the people surveyed said they’re saving less now than they were two years ago.
The report rings true with the findings from our latest Quarterly Consumer Report, which revealed that in the last month, almost 6m households dipped into their savings just to cover everyday expenses. This is a stark difference to last summer, when the main reason people raided their savings was to pay for holidays.
As far as I’m concerned, the lack of savings has little to do with people not ‘making an effort.’ Preparing for the future isn’t easy when there are so many more immediate – and increasing – pressures on your income. It’s hardly surprising that people are struggling to save, given that many aren’t able to cover essential spending each month. In fact, our report found that, last month, four million people took out extra credit, borrowing an average of £381.
And even if you can afford to squirrel some money away, the measly savings rates on offer mean there’s not much incentive to do so.
Families feeling the burden
Our report also found that 2.9m households borrowed money from family or friends in the last month, as people are often lending (or giving) money to their children, sometimes to help them cover daily living expenses. This has meant that a quarter of parents are cutting back on their savings, and almost one in 10 have stopped saving altogether.
I’m one of five children, and I’m all too aware of how reliance on our parents for financial support has affected their ability to save. Helping us through university was and is one of the biggest obstacles to any saving aspirations they might have. Despite my brothers both having part-time jobs to supplement their student loans, they still find themselves having to turn to the bank of mum and dad.
Is offering financial support to family and friends affecting your ability to save? Have you been dipping into savings to cover the cost of essentials?