How much do Brits really save? Ever wondered how your savings stack up against the average Brit’s? Most of us like to think we have a decent level of control over our personal finances, but with salaries stagnating and the cost of living on the rise, many of us are putting away less money each month than we’d like. So, how much does Britain really save? And do we need to curb our love of holidays and takeaways to make up the shortfall? We asked the experts and surveyed over 2,000 British adults to lift the lid on the state of our finances.
The great British gamble When it comes to our savings, one thing’s clear – 1 in 3 Brits are living dangerously close to the edge. The Money Advice Service recommends keeping three months’ essential outgoings in savings to cover an emergency or unexpected bill, however just under a third of people in the UK have less than £1,500 in the bank, and 15% of people have no savings at all. Over half of Brits throw caution to the wind by not adding to their savings on a monthly basis. But, if you thought modern Britain’s short-termism is to blame, think again. 40% of Brits said lacklustre earnings were the reason they’re not adding more to their savings. Similarly, the reason many of us aren’t meeting our savings goals is that we don’t have them. Our recent survey found that almost 2 out of 3 British adults haven’t made a financial plan or budget for 2018. So, are Brits’ particularly bad at putting aside their hard-earned pennies? According to Dr Kristina Vasileva, a senior lecturer in Finance at the University of Westminster, all humans have certain inherent biases that make us poorly suited to saving: “Lack of self-discipline (a preference for spending now over gains in the future), status-quo bias (the reluctance to change our financial positions) and risk aversion can all get in the way of us developing healthy saving habits.”
Mind the gender savings gap
You’ll have probably heard of the gender pay gap – the unfortunate reality that women are, on average, paid less than men. But another growing issue is the ‘gender savings gap’, the fact that women in the UK have less savings stashed away than the opposite sex.
55% of British male adults add to their savings each month, compared with only 43% of women. And almost 1 in 4 men have more than £20,000 saved – whether in ISAs, stocks and shares, or savings accounts – compared with less than 1 in 5 women.
The results will have many people wondering whether there are behavioural differences between men and women when it comes to saving, or whether the continuing legacy of gender inequality is the root cause of the gap. According to Dr Thomas Webb, a social psychologist and lecturer at the University of Sheffield: “There is surprisingly little research on gender differences in approaches to managing personal finances. The only reliable finding seems to be that men and women tend to spend their money on different things].”
London: a city of super-savers?
1 The results are based on an online survey, conducted by Atomik Research on behalf of Legal & General, among 2,002 UK adults aged under 65 (18-64). The survey took place between 14th and 16th January 2018. Atomik Research is an independent market research agency that employs MRS-certified researchers and abides to MRS code. Data is available upon request.
London can sometimes feel like a different country from the rest of the UK, and the trend applies just as much to our savings. Londoners save far more on a regular basis than the rest of the UK. 70% of Brits in the capital said they add to their savings every month, compared to just 36% in the West Midlands and 38% in the South West. Londoners are more tech-savvy with their finances too, with 21% of people in the capital saying they use an app to help them save, compared with the national average of 12%.
Cast your eye up to the North, and saving habits look remarkably different. Those in the North-West are most likely to say they find saving money each month “very difficult”. They’re also most likely to have no savings in the bank to fall back on in the event of an emergency or major life event.
Those in the North-East, on the other hand, fare better. After London, those in counties such as Northumberland, County Durham and Tyne and Wear are most likely to add to their savings every month. They’re also fairly savvy with their extra cash and – after London – are most likely to invest in stocks and shares ISAs and P2P sites than the average Brit.
A nation of optimists
Brits have a reputation for being a pessimistic bunch. But, in the realm of personal finances, we tend to take a glass half-full approach. 91% expect to add more or the same amount to their savings in 2018 than they did in 2017, and 42% are expecting an increase in income, to help them do this. What’s more, over half of us are planning on cutting back on our monthly spending to plug the savings gap. While Britain’s saving habits may leave a lot to be desired, as a nation we are surprisingly optimistic that things can only get better this year.
Legal & General are committed to bringing you a wide range of views on the best ways to save and spend your money. Ever wondered why we find it so easy to spend and so hard to save? We asked a team of psychologists, economists and financial experts what’s really holding us, and how we can hack our brains to save more. The opinions expressed in this article are those of the individual experts and may not be representative of Legal & General.