Even though only a few months ago, a survey by MoneyMood revealed that over the last year Britons have become far more likely to save their money than in previous years, a new study suggests that as a nation we are still very reluctant to save, with only 1 in 4 people spending rather than saving their money, this being a record low since the last half a century.
The study which was coordinated by the Post Office has found that over a quarter of those who said they don't save are trying to pay debts, whereas a fifth are simply spending all they receive. Indeed, statistics from the Office for National Statistics show that on average British people are saving a lower proportion of their income than any time in the past 50 years. Furthermore, the majority of those who do save end up using their savings on holidays.
BBC economics editor Evan Davis argues that the results are not surprising because of the incredibly low interest rates of recent years. People are simply not tempted to save right now because they know that they will not get much more back if they do. He also says that in recent years, banks have offered low interest rates to encourage people to spend in order to boost economic growth, and this has in fact been successful. As he explains: "To some extent the economy has grown a lot and that's been dependent on us not saving."
Whatever the benefits for Britain's economy, however, the new figures for how much money is being saved are clearly a serious issue for many. In fact a BBC poll currently shows that almost 60% of readers are actually worried they are not saving enough.
Should we all be worried? Evan Davis believes that by not saving a reasonable amount (i.e. over 2% of our disposable income), we are not best preparing for retirement, as even though we are saving more the richer we get, our expectations rise as well and we will want a lot more when we retire.
Experts believe that not saving is more of a serious issue for those who are self-employed. For example, in February a survey from pension services company Scottish Widows revealed that only about a third of self-employed people have money lined up for old age, and this is particularly concerning for them as they won't be able to benefit from any pension schemes from their employers. Furthermore, almost 6 out of every 10 people who are self-employed are aged over 50, and many of them have larger debts than employed people due to the expenses of starting up their business.
Overall, all these statistics show that fewer and fewer British people are taking care of their futures by setting aside money for old age, a situation which could result in financial problems later in life.
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