Middle-aged middle-classes struggling to save for future as costs rise

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