- Nearly half (48%) of all young adults (18-34 age brackets) said a lack of disposable income affected their ability to save.
- Three quarters of 18-24 and 63% of 25-34 year olds cut on spending in order to save.
- Almost four in five (79%) of those with savings admitted to having to dip into their savings to cover their day-to-day living expenses.
New research by NS&I has revealed that nearly one in four people in the UK (23%) have no savings at all. This comes despite 77% of people saying they believed it was important to save.
In an encouraging development, 87% of 18-24 year olds said they also agree that saving is important to them, of which over half (53%) said they strongly agree. In contrast, those aged 65 and over were more likely to be ambivalent on the importance of saving, with just over one in five (22%) of respondents saying they neither agree nor disagree.
Nearly four in five (79%) of those with savings admitted to dipping into their savings to cover their day-to-day living expenses. 35% said they sometimes or often dip into their savings, while almost one in ten (9%) are said to do this often. This is more prevalent among those in younger age brackets with 12% of 18-24 year olds likely to take this course of action often, and over a third (34%) doing so sometimes. Similarly, three in four (75%) 18-24 year olds and 63% of 25-34 year olds said they were likely to cut down on their spending to help them save, while only 36% of 55-64 year olds and 30% of respondents aged 65+ said they cut their spending in a similar way to help them save. These findings suggest a generational split in attitudes to saving between older and more financially secure savers (35-65+ age brackets) and their younger counterparts (18-34 year olds).
Barriers to saving
Young adults aged 18-34 face new challenges to the ways they save, and are sometimes called Generation Rent. This is a cohort of young adults living in rented accommodation who often struggle to get a foot on the property ladder but are eager to become home owners themselves. Nearly half of all young adults (18-34 age brackets) said a significant barrier to their ability to save was a lack of disposable income; although it isn’t for lack of trying, only 5% and 2% of 18-24 and 25-34 year olds respectively said they did not want to save. A third of 25-34 year olds also said that debt repayments affected their ability to save, in contrast to only 6% of over 65s said the same. Generation Rent are keen to save it seems, but are increasingly restricted by the limited savings options available to them.
The research suggests there are a number of factors that can help adults to save. When surveyed, almost a quarter (23%) said they think they would be able to save more by keeping the change from a purchase. Those aged 18-24 were far more likely to think they would be able to save more in this way (37%). In contrast, only 14% and 9% respectively of those aged 55-64 and 65+ said they thought they were able to save more in this way.
Ways to save
Three in four respondents aged 18-24, and almost two thirds (63%) of 25-34 year olds, said they agree that where they can, they cut down on spending in order to save more. 31% of 55-64 year olds and a third of those aged 65+ disagreed with that statement, highlighting a further key difference in attitudes to saving.
A large number of respondents with savings (40%) said they keep their savings in a current account rather than in any kind of savings product, while a quarter of Britons (24%) use investment accounts such as stocks and shares and trust funds to make the most of their savings. A smaller but significant group of those with savings (13%) said they keep their savings in a cash pot at home, thereby missing out on better interest rates. More encouragingly, however, one in five (20%) said that they would set up options in advance to help them save including direct debits or standing orders that put away money each month.
Good savings habits do exist
There is some good news however, 38% of those who have savings do so when they can from their income while 42% save each month from their pay day. This may be the same amount each month (14%) or different amounts each month (15%), and encouragingly 13% save a certain amount on each pay day and then tend to top up afterwards, gradually building a savings habit.
Jill Waters, NS&I Retail Director, said:
“It’s clear that attitudes to saving are changing, with Generation Rent in particular facing new challenges to their ability to save. Often there is a sense that younger people are ambivalent about saving today for a rainy day tomorrow, but this research challenges that myth. If we want to build a stronger savings culture, it’s clear we have to support the younger generation in their aspirations to save.
“It’s important that people are realistic when it comes to saving and acknowledge that small steps can eventually lead to bigger savings pots. To start that savings habit, you can save some of the change from purchases, putting little bits away now in order to make regular savings from your income.
“There is plenty of information from various sources, including comparison websites and financial providers, about where you can start your savings journey and how to make the best decision for you in terms of growing your savings pot.”
Notes to Editors
- NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to 25 million customers. All products offer 100% capital security, because NS&I is backed by HM Treasury.
- This research was conducted by Populus using an online sample of 2,051 GB adults 16+ between 25th and 27th October 2019. Data is weighted to be representative of the population of Great Britain. Targets for quotas and weights are taken from the National Readership Survey, a random probability F2F survey conducted annually with 34,000 adults. Populus is a founder member of the British Polling Council and abides by its rules. For further information, see http://www.britishpollingcouncil.org/
- For further information, please contact the NS&I media team.
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