UK Savings Week aims to get people engaged with saving.
But with the pressure on households from the rising prices of energy and food, is it reasonable to expect people to save at the moment?
1) For many it won’t be the right time to save
Rising prices are clearly putting a strain on many households’ finances.
And even without the rises in the cost of living, there will always be some people whose circumstances mean they aren’t able to save at any one time.
And for those who have outstanding debts, it is likely to make sense to repay these before starting to save.
2) But there will be many who can save
Everybody is different, and their circumstances are different too.
So it is too simplistic to say that nobody can save in the current environment, or only the well-off can save.
This was demonstrated in a recent survey by Opinium which found that 64% of people who currently had no savings at all said that they could save £10 a month.[1]
A research report we commissioned from Toynbee Hall a few years ago had the title “Beyond age and income” as it showed saving wasn’t just the preserve of older generations and the wealthy – differences in attitudes and behaviours often lay behind whether somebody was a saver or not.
3) For those who can, there is no time like the present to start saving
The winter looks set to be tough as prices continue to rise, and next year could be even more challenging.
Against this context, if someone can build even a small savings buffer it could help them to meet an unexpected bill or to deal with a large expense.
The Money & Pensions Service estimates that 11.5 million people had less than £100 to fall back on in an emergency, even before the latest financial pressures.
As many households saw through the pandemic, having money to draw upon when things get tough not only helps the saver to get out of a hole, it reduces their money worries and can give them a sense of security.
Frank, a building society saver from London whose story features on the UK Savings Week website, describes it well:
“When the price of almost everything started to rise, I realised the time had come to build some reserves… .I’m not able to save large sums of money every month so I chose a regular saver account that was restricted to £50 per month as I knew I could afford to do that.
So far I’ve not had to dip into my savings, but knowing I have a lifeline if something unexpected happens has reduced my anxiety. I’m also feeling very proud of myself!”
4) And for those who have savings, managing them could pay off
Meanwhile, there will be people who are less affected by rising prices, and who have already built up a stock of savings.
As interest rates have risen considerably since the end of last year, checking to make sure your savings and investments are earning a good return is more worthwhile than it has been for years.
Doing so will help these savers to reach their goals sooner, whether that is building a rainy day buffer, or saving towards a large purchase such as a car or a house deposit.
So for some people, no, it won’t be the right time to start saving.
But UK Savings Week will be an ongoing campaign. Hopefully people will be able to start saving at some point in the future even if they can’t now.
I think it’s important to raise awareness of the benefits of saving so that when the time is right, people know the support is there.
And for others who can save, or those who have savings that could be earning more, UK Savings Week hopes to show them that there is no time like now to start engaging with saving.
[1] Opinium surveyed 2000 UK adults online between 23-25/08/22. Results are weighted to be nationally representative.
