There’s more being put away, but it gathers no interest, writes Jeff Salway
Rainy day savings are on the rise in Scotland, as more people move to protect their finances against tough economic conditions.
However, thousands of Scottish savers are undermining their efforts and missing out on interest payments by failing to make their money work harder, a report out today warns.
The average saver north of the Border plans to put away £243 a month over the new financial year.
Scots are saving more than in previous years, according to new Clydesdale Bank research, but almost a fifth keep their money in accounts earning no interest.
Another third have no idea what interest they are getting on their savings and a quarter of families have nothing set aside for their children.
The survey – published days after Moneyfacts revealed that the rate paid by the average no-notice account has hit a three-year high – found that 54 per cent of Scottish savers are using their tax-free individual savings account (Isa) allowances. Another 9 per cent of those questioned admit to squirreling their spare cash away at home, however.
Steve Reid, retail banking director at Clydesdale Bank, said: “While it’s really positive news to see that people are planning ahead and setting themselves savings goals, it’s understandable that many people are unsure of the best options to make their personal finances work hard.”
Those boosting their savings levels are aiming primarily to strengthen their financial security, with fewer people putting money aside for big purchases.
Nick Cann, chief executive of the Institute of Financial Planning, said he was encouraged by signs that savers want to put more money away this year and plan for the future.
But he added: “However, around 15 per cent of people have less than £500 in savings and many others are not making their money work well for them, keeping savings in their current account or even in their home.”
Retirement plans also featured highly among the reasons for saving more money, but just one in ten people said they were saving money for their children, with 23 per cent of parents admitting to having nothing put by for their kids.
The survey also found that 27 per cent of Britons would not seek financial advice even if they had pressing money worries.
“We would always encourage people to seek advice on managing their money and look at ways of making their money work harder in a savings account or high interest Isa to suit their needs,” said Cann.
The research comes on the back of a report by Scottish Widows underlining the impact of the difficult economic climate on household finances.
More than a sixth of adults have no money left at the end of each month after essential household costs, according to the third annual Scottish Widows Priorities of Life Index, while 19 per cent have less than £50 left over.
Yet while almost three in 10 people either say their finances have been hit hard by economic turbulence or that they are beginning to feel the squeeze, financial planning has taken a back seat.
The number of people who admit to neglecting their financial priorities has increased sharply over the last year, according to Scottish Widows, which said families faced greater outgoings even as incomes remain stagnant.