Rising living costs mean that people are less and less able to put savings aside, according to new research from Nationwide Building Society.
It is generally advised that we should all have at least three months’ salary set aside for a rainy day. However, increased living costs mean that incomes are squeezed and people have less and less spare cash to put into their savings.
The research shows that one in five savers (21%) have less than £500 set aside, with one in ten (11%) having less than £100. This amount is unlikely to stretch very far in the event of unemployment, illness or emergency. The research also discovered that many people are having to dip into their savings regularly in order to get by, with a third (34%) dipping in at least once a quarter.
However, the research indicates that people’s lack of saving isn’t due to laziness or not caring about the future. Almost nine out of ten people (86%) think that saving is important, but three out of five (62%) say that they can’t afford to save at all, or can’t save more than they already are. As a result of this, 11% of people don’t save at all, while 27% don’t save regularly.
The research also highlights that of those who are saving, not all are doing so as effectively as they could be. Less than half (48%) are taking advantage of a cash ISA, which offers protection from tax. Just 9% of people are willing to tie up their money in a fixed rate bond for higher levels of interest, with 41% holding an instant access account. This is perhaps unsurprising, given that so many people need to dip into their savings to cover living costs.
Darren Bailey, head of savings pricing at Nationwide, said:
“The rising cost of living continues to impact family finances and despite wanting to save, many are finding they just don’t have the spare money.
“Yet, even putting a small amount aside each month can produce a decent nest egg which can give families funds to fall back on should they need to.”