4th December 2015
Just one third of the UK population is saving regularly and less than a third even know their yearly ISA allowance.
A survey by AA Savings shows the average saver has £16,917 put away but only one in three are saving regularly and less than a third know the ISA allowance is £15,240.
It seems consumers good intentions are not translating into action. Despite few regularly saving, three in 10 sets money aside when they can afford to and 20% do not have the spare cash to save even if they would like to.
While confidence in the economy has increased, 47% of people say their ability to save has not changed in the past year while 27% said they couldn’t save as much as they used to. Another 24% said they had managed to save more.
The average saver will put away £1,442 in the coming year while 10% aim to save more than £5,000.
Michael Johnson, director of AA Financial Services, said: ‘It’s disappointing to see that only around a third of people are saving money regularly. Doing so can only be beneficial in the long run, especially if there is an emergency expense to pay for.
‘Those with modest savings may not feel their savings pot is big enough for interest rates to make a great deal of difference to them, but even so there are different types of savings account that reflect different needs.
‘Given the increase in the tax-free allowance in 2014, the government are trying to encourage savings, but there is more consumers can do to make the most of their money.’
The most common reasons to save are for a holiday (345) and a rainy day (30%). Another 18% save for a ‘just in case’ expense and the same number are saving for retirement. A further 16% are saving for home improvements, 15% for a new car and 14% for a new home.
When it comes to where the money is being saved, people are loyal, with 54% never changing their savings account. Just a quarter say they swap accounts when they see a better deal and one in five change when the introductory bonus comes to an end.
‘Savers who have never switched their savings account are likely to be missing out on valuable interest earnings from a higher-paying account,’ said Johnson.
‘It’s becoming easier to switch savings accounts yet many people leave their money in accounts that earn poor interest rates or are inflexible, making it difficult to withdraw money. Making sure you know when any fixed term rates or bonus periods end is vital to making your savings work as hard as they can.
‘Questions you should ask yourself include: Do you need regular access to your money? How long can you leave your savings untouched? Accounts where you put your savings away for a set period of time – typically from one to five years – often offer the best interest rates.’