Public says debts get in the way of saving

Published on Monday 1 June 2009 21:33

THE number of people unable to save money because of debt problems and high living costs has soared this year, according to a study published today.

The third annual Scottish Widows Savings and Investment report found that 85 per cent of people failing to save money regularly said they had nothing to put aside.

Three-quarters of those without money to save blamed high costs of living, compared with just over two-thirds last year, while 42 per cent said debt was the biggest obstacle to saving , up from 32 per cent in 2008.

Anne Young, a savings expert at Scottish Widows, described the findings as alarming.

"It has become more of a priority for people to reduce their current debts and simply get by on a day-to-day basis rather than saving for their futures," said Young. "However, in climates like these, it is important to save even a small amount now to get into a saving habit and build up some capital."

Of those without money to put aside, almost a third identified high taxes as a reason, while 50 per cent said they would be encouraged to save if tax relief was available on their savings.

Young urged the government to do more to encourage the use of tax-free individual savings accounts (Isas). The government announced a rise in the Isa limit to 10,200 in the Budget, to come into force in October for over 50s and next April for other savers. But Young said the current economic climate presented the government with an opportunity to improve awareness of the best and most tax-efficient ways to save and invest.