A recent survey has revealed the startling statistic that over 16 million people in the UK have less than £100 of savings. In five areas of the country – Northern Ireland, the West Midlands, Yorkshire and Humber, North East England and Wales – over 50% of the adult population has savings amounting to less than that amount. The South East had the lowest amount of people with savings of less than £100 at just over 30%.
The research by the Money Advice Service (MAS) was carried out by CACI, a consumer data company with 48 million adults in its database. Whilst the results suggested that saving was particularly difficult for those on low incomes, they also showed that around 25% of adults with less than £13,500 in household income have over £1,000 in savings. Additionally, two in five people in the same bracket are able to put some money away each month.
Surprisingly, 45% of those without savings earned a household income over £30,000, meaning they are not considered to be low-income. This means that they should be in a position which allows them to build up a savings buffer in order to overcome financial obstacles.
The reasons behind the lack of savings are also concerning. 47% of those who are in a position to save said they simply didn’t have any financial goals for the next five years, whilst slightly more at 49% expressed a preference for living for today over planning for tomorrow.
The advice from MAS is simple: saving a little regularly is an achievable way to build up savings over time. “If you earn enough to set even a little aside each month that’s great,” said Nick Hill, a representative of MAS. “A direct debit into a savings account might be an easy way to do this, even if you start small and increase the amount with time.”
The Personal Savings Allowance introduced in April will help those who save get a little more from their money too. It allows those paying a basic rate of tax to earn up to £1,000 in a savings account annually whilst paying no income tax. For higher-rate tax payers, the amount is reduced to £500, whilst those paying the top rate of tax can’t take advantage of the allowance.