Middle-aged middle-classes struggling to save for future as costs rise
Spiralling household bills have stifled savers. Picture: Jayne Emsley
THE “squeezed middle” of almost half of UK adults is struggling to put money aside for the future, amid spiralling household bills and high inflation – with those aged 35 to 44 the worst hit of all age groups.
A “savings map” of Britain, compiled by HSBC, showed that seven in 10 people UK-wide generally tried to boost their savings balances last year, typically holding around £17,875 worth of savings and investments.
Determination to save harder this year is strong, with a third of people generally planning to save more in 2012 than they did in 2011.
However, those in the 35-to-44 age group – who are most likely to have children still at school – had the lowest level of savings compared with income of those surveyed.
The percentage of gross annual household earnings that people in that age group managed to save up dropped from 31 per cent in 2010 to 21 per cent last year – an average of £9,087.
However, overall, thrifty Scots have one of the highest levels of savings of anywhere in the country – holding on to an average of 74 per cent of their salaries in bank accounts.
The average Scottish savings pot of £20,131 was made up of 50 per cent cash, followed by about 16 per cent of equities, according to the report.
Only Londoners and those in the south east of England put away more money – at just over £21,000 in each region, followed by people in the south west, who were sitting on savings of £20,768.
“2011 was a tough year for Scottish savers given the harsh financial climate, but it is positive to see the substantial effort made to save in spite of this,” said Bruno Genovese, head of savings at HSBC.
“Scots have shown themselves to be among the UK’s keenest savers, with eight out of ten adults putting some money away whenever they can and building up a healthy savings pot.
“Unfortunately, the high cost of living meant an increasing number in the squeezed middle were also forced to dip into their savings last year, leaving around a third of them with less than they started with.”
He added: “While 2012 is also likely to prove a challenge for the majority of savers, Scots are a hardy bunch and intentions to save the same amount or even more this year than last remain high.”
The report found that 23 per cent of people are “struggling savers”, who withdrew more than they put away, while the same proportion are “static savers” – the people who saved around as much as they withdrew.
A quarter of the population, who saved more than they withdrew, were termed “successful savers”.
However, 29 per cent said they did not or could not even try to save anything.
Of those who did save, one in five said the main reason was to have some money set aside for a “rainy day” fund, while 16 per cent said they were aiming to hoard enough money for a specific purchase, such as a new car or a holiday.
“All age groups have been badly impacted by the rising cost of living and their ability to save has been affected,” said Paul Lawler, spokesman for Moneysupermarket.com.
“Whereas people would have put aside a certain proportion of their wages every month, they just can’t do that now because of things like rising energy costs which are hitting people hard.”
He added: “On top of that, we have had high inflation, although that is beginning to come down.
“Also, banks are starting to open up their savings rates again, which we think will encourage people to start saving again.”
Some banks are offering savings account levels at six times higher than the Bank of England base rate – which currently stands at 0.5 per cent – but the actual interest offered is still far lower than pre-credit crunch, when base rates were much higher.
However, consumer groups warned that increased pressures on household spending has left many Scots struggling to find any money to put aside.
Susan McPhee, head of policy for Citizens Advice Scotland, said: “The people we see at Citizens Advice Bureaux would love to be able to save for tomorrow, but the trouble is that most of them are having a hard enough time putting food on the table today.
“We would certainly advise people to try and put some money away if they possibly can, but for most the priority is staying afloat month by month and, indeed, to avoid getting into debt.”
Trisha McAuley, deputy director at Consumer Focus Scotland, added: “It’s good that, even in difficult times, people are making provision for the future. However, although many people clearly understand and recognise the importance of savings, it is worrying that almost a third are not saving at all.
“We’ve also got to remember that many pension pots are being eroded. Consumers are having to penny pinch now in difficult times and too many of them will not be able save for the future and have the cushion of a savings pot once they retire.”
Experience is always the best teacher
WHILE families in the UK are struggling to save as much as they used to do, those in other countries are much more likely to put money aside.
Research by Lloyds TSB showed families in China and in Germany outstripped the UK in terms of their ability to save.
The average UK household has an average of £5,000 in savings whereas in Germany, families have an average of £8,600 stashed away, and in China the average household has savings of £19,000.
According to the recent household saving report published by the bank, average savings in the UK have fallen by 11 per cent and in Germany by 7 per cent.
By contrast, family savings in China have risen by seven per cent, with the average family saving 47 per cent of what they earn.
Analysts say times of starvation and hardship within living memory have created a strong habit in Chinese people of saving for times of struggle.
Greg Coughlan, head of savings at Lloyds TSB, said: “While these findings should perhaps not be surprising in view of the figures we have seen on savings ratios, they are still remarkable.
Despite significantly higher income levels, today’s British and German households are both being roundly beaten in the savings stakes by urban Chinese households.”
CLAIRE SMITH
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Comments
There are 17 comments to this article
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duelaynomore
Monday, February 13, 2012 at 01:11 AMHello there No.14. Where does this super sized chip come from. Was it the mention of hsbc, or other banks? As for these supposed savings rates, I find them quite incredibly high, and I presume must be measured on only those persons with savings accounts. I can however believe that in countries where the state does not offer background welfare assurance and assistance (like China), then individual savings rates will be a high percentage of their income...they have to make hay while the sun shines...nobody else will do it for them...This is quite unlike our situation here, where we have so many able bodied sitting on their behinds filling out benefit claims, and deciding how many kids they need to support their lifestyle.
Tartancult
Saturday, February 11, 2012 at 06:36 PM#7 An annoying headline! As one cannot save for either the past or the present (unless one means gifts), then only the future is left; so mentioning it is a solecism. Poor sub-editing-------------------------------If we catalogue events in, for example, a video tape we are indeed saving the past (for the present and the future) and if we save for the future we are indeed saving for the present when that future "arrives" as the present so your mentioning it is a solipsism. Poor sub-wisdom.
Highland Hibby
Saturday, February 11, 2012 at 05:33 PM#13 LOL. That's a classic!
Centris
Saturday, February 11, 2012 at 05:15 PMRich people paying rich people to tell middle class people to blame poor people scuse me while I vomit.
Tintock Pete
Saturday, February 11, 2012 at 04:20 PMI'm sure I heard a woman on the radio claim to be middle class as she did not have to work and her benefits were more than she could ever hope to earn.
duelaynomore
Saturday, February 11, 2012 at 02:31 PMNo 1. don't throw in the towel, if you do that the naysayers will have won out. Just keep struggling on and try to avoid voting for governments which wish to increase the taxes on the population. When you get to the point where they means test you for housing benefits or the old folks home..just give the excess to your kids... Do not give it to civil servants who always think they know better than we do...it merely encourages continued prolfigacy on a grand scale..wind turbine subsidies etc..
Tintock Pete
Saturday, February 11, 2012 at 02:21 PMThe other side of the coin is that a lot of people are not homeless due to the low mortgage rate and people like myself have more disposable income to play with.
Danielrober2
Saturday, February 11, 2012 at 11:50 AMWe are the age range that everybody likes to forget and its been like this for years. The fact the we were the ones who put the Cool, into Cool Britannia, Mad into MADchester and GO into GlasGOw is often over looked or rewritten by PR consultants. ............................................ Still after our kids leave school we will no doubt now have to clean up the mess from dozens of vanity projects. Projects that if they are lucky return 40 pence in the £1 investment, on a promised £2 rate of return. As parents and none parents though we are all different, diverse and support many differing points of view. What we all share, is an experience from the 1980s and 1990s that recoveries can be made with EFFORT. We all know what works HARD WORK, EDCUATION and TRAINING.
SINGAPOREAN
Saturday, February 11, 2012 at 11:38 AMWe DID save for our retirement. Now it's dissolving away at an alarming speed through inflation and low interest rates. Poverty stricken old age looms large.
Rhynieman
Saturday, February 11, 2012 at 10:04 AMWhat on Earth is the MIDDLE CLASS does a class system still exist in Scotland?
Ancient Wisdom
Saturday, February 11, 2012 at 09:20 AMAn annoying headline! As one cannot save for either the past or the present (unless one means gifts), then only the future is left; so mentioning it is a solecism. Poor sub-editing.
alanmiller63
Saturday, February 11, 2012 at 08:51 AMWhere do these figures come from? Yet another meaningless report that raises more questions than it answers. And by the way what is an average family in China got to do with it?
Harvey Mushman
Saturday, February 11, 2012 at 04:52 AMThe Scotsman used this exact same photo for a completely different story about a week ago.....
Faceless_bureaucrat
Saturday, February 11, 2012 at 03:55 AM#2 - Your comment is completely irrelevant. One is no more interested in the students fee's in England than in Ireland or Germany. So why did you think it relevant in this context.
Faceless_bureaucrat
Saturday, February 11, 2012 at 03:53 AMEven the savers are being screwed by the governments high inflation, low interest rate policy. Inflation at 4% , average high street interest rate 1% (0.8% after government tax).
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