One in five have less than £500 saved
One in five people have less than £500 in savings, and one in 10 have less than £100, according to research from Nationwide.
Despite 86% of savers acknowledging the importance of putting money aside each month, a majority (62%) say they simply cannot afford to do so.
Of those who are saving, just 9% are willing to commit their money to a fixed rate bond, regardless of the higher rate of interest paid. Instead 48% of those with money put aside have their money in a cash Isa, and 41% have an instant access account.
Darren Bailey, head of savings pricing at Nationwide, thinks the rising cost of living is a major factor as to why people are not saving. "Despite wanting to save, many are finding they just don't have the spare money," he says.
Danny Cox, head of financial planning at Hargreaves Lansdown, says the figures are "hardly surprising" after five years of financial difficulty. "The key to financial security is to spend less than you earn and save the difference. This means making tough choices," he says.
"Even putting a small amount aside each month can produce a decent nest egg, which can give families funds to fall back on should they need to," adds Bailey.
"Regular saving into a cash Isa will build over time and give you the opportunity to make a mountain out of little molehills," agrees Cox.
This article was written for our sister website Money Observer
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.