We're not saving. It's a crisis.
We’re all doing so much better now aren’t we? We’ve successfully negotiated the financial crisis and we’re cruising down Easy Street… or not. New research suggests that instead we have lurched from one crisis to another, with the country now facing a savings crisis instead.
A new financial wellness index, constructed from research conducted by the University of Bristol, has found that half of UK adults do not have any savings or investments and are struggling to put away money for the inevitable rainy day. Furthermore, 40% of people also do not have any long term assets to fall back on, such as pensions or property.
The survey found that, despite strong financial confidence in the UK, with people scoring well in the index for management of day-to-day finances and steering clear of short term debt, this isn’t the true picture. While people seems to be better at managing their immediate financial requirements, people don’t have the vision, or the means, to financially manage future requirements. The survey described the positivity surrounding finances as “misguided”, claiming “households are failing to accrue the necessary savings and assets to adequately protect their future”.
The research also looked at comparisons throughout our green and pleasant land. People in Northern Ireland were the least financially well overall, with the South East (unsurprisingly) scoring the highest. However, Londoners were among the lowest scorers despite having the highest average salary, owing to hefty living costs and the near impossibility of getting on the property ladder down there.
Andrew Hagger, of Moneycomms, said, unnecessarily: “Those on a low wage simply don’t have sufficient leeway in their household budget to save.
“Perhaps the introduction of the new minimum wage will put extra money in people’s pockets, but with interest rates on savings accounts at rock bottom and the government causing confusion by constantly meddling with pension rules, I fear the numbers using this additional income to save will be minimal,” he added.
Although last weekend saw speculation of cuts to higher rate pension relief quoshed (for now), savings rates are languishing in the doldrums. In January, Moneyfacts recorded 139 rate cuts compared with 21 rises, and more than 169 rate cuts in February. Experts predict that this ‘ISA season’ will be a massive non-event, with providers almost competing to offer the worst deals on cash ISAs ahead of the 5 April investment deadline for 2015/16.