This week, High Street bank Lloyds TSB (LSE: LLOY)(NYSE: LYG) released its second survey into "Savings in Britain" (its previous review was compiled in November 2002). I know it's sad to admit it, but I found the results fascinating reading!
Before you read on, keep in mind one of my favourite phrases: "averages invite comparisons". You may fall into many of the categories below; what's important is that you learn to recognise the benefits of saving and act accordingly.
Here are the questions that Lloyds asked in its survey (we should all ask ourselves the same questions):
Do you save?
What's intriguing is that Britain is neatly divided into three equal groups of savers:
- One-third of us save regularly (down 2% from the previous survey)
- One-third have savings but don't add to them regularly
- The final third have no savings at all (up 4%).
So, as far as our finances are concerned, you could call these groups the Good, the Bad and the Ugly! It seems to me that life without any savings is pretty harsh – we all need an emergency fund to dip into when disaster strikes.
Since the previous survey, the proportion of men in the first group has dropped 5% to 34% - what are we spending our money on now, chaps? What's more, the proportion of people in the 18-34 age bracket who are not saving increased by 6%; for the 35-44 age group, the increase was a whopping 10%. Perhaps the cost of running our homes and families is hitting our ability to save?
Scotland and Wales have the highest proportion of regular savers; the West Midlands and Yorkshire & Humberside have the highest proportion of non-savers. Once again, this reinforces the Scots' reputation for financial cautiousness.
How do you save?
- One-quarter (25%) of us save regularly. Very Foolish!
- Another quarter save whatever is left over
- One-fifth (20%) have money left over but don't save it
- One-seventh (15%) spend every penny - more men than women. Off to Living Below Your Means with you!
- 7% overspend every month. Head for Dealing With Debt before it's too late!
In the South-West, less than 1 in 5 people save regularly. 1 in 9 Londoners admits to over-spending every month, compared to 1 in 33 of those in the North-West.
How much do you save?
The average amount people save has increased by £39 to a healthy £280 a month. 36% of us save between £100 and £500 a month; only 8% admitted to saving nothing (but I bet the true figure is a lot higher). On average, men save around £100 a month more than women, a reflection of our higher wages.
One in ten men and one in twenty women save over £500 a month – wow! The biggest savers are the 35-44 age group, who put aside an average of £340 a month.
What percentage of your income do you save?
Close to half of us (43%) have a savings ratio of zero, which means that we're not saving at all. These are very naughty types who will be sent to bed with no dinner!
- A third of us (34%) save between 1% and 10% of our monthly income ("could do better")
- A further 13% save between 11% and 20% ("highly commended")
- Bronze medals go to the 4% at 21%-30%
- Silver to the 3% at 31%-50%
- Gold to the precious few - just 2% - who save more than half their incomes (we are not worthy!).
For what do you save?
- 29% of us are saving for a rainy day or emergencies
- 20% are saving for a holiday or to travel
- 19% are saving for retirement (but few in the 18-34 bracket)
- 14% are saving for nothing in particular (but good on you anyway)
- 10% are saving for home or garden improvements (thanks to all the makeover programmes)
- 9% are simply saving "for the future"
- 7% are saving for a car or motorbike
- 7% are saving for children
- A mere 1% are saving for a deposit on a home (which looks bad for the housing market!)
Why don't you save?
- 46% of us claim we don't have any spare cash to save or can't afford to (the usual story)
- 17% say that family responsibilities prevent us from saving (do I know all about this...)
- A privileged 9% of us say we don't save because we don't need to, having more than enough already – here's an elite group that I'd like to join!
What makes saving difficult?
- 13% of us say being generous with gifts to friends and family prevents them saving (yeah, right - I'd like a few more people like this in my life!)
- 11% are impulsive shoppers (you've got to resist the "bargains" next time)
- 9% claim credit cards make spending too easy
- 8% eat or go out a lot (ah, the joys of youth...)
- 4% claim they're always the first to buy a round of drinks (I would suggest you occasionally lag behind when approaching the bar!)
What makes saving easier?
- 21% say setting a budget (learn how in our financial healthcheck)
- 19% say understanding its importance from personal experience
- 18% say understanding its importance from parents and upbringing (oh dear, more burdens for parents!)
- 12% say not having easy access to savings (what I call the "lock it away" approach to discipline)
- 8% say looking for "buy one, get one free" goods
- 7% say buying goods in the sales (are these the same impulsive shoppers above?)
Do you dip into your savings?
- Nearly half of us (48%) dip into our savings twice a year
- 11% never dip
- 4% dip every week (back to Fool School for you)
Why do you dip?
- Half of us dip to pay for large items, such as a house, car or holiday
- 12% of women and 9% if men dip for a special occasion or to treat ourselves
- 17% of savers in the North-West dip to pay for day-to-day living expenses (no, no, no!)
How optimistic are you about saving in the next six months?
- 38% of savers expect to increase the amount they save, with men more optimistic than women
- 43% expect their level of saving to stay the same
- 15% expect to reduce the amount they save.
The most optimistic savers are in the North-East and North-West, the most pessimistic are in the South-West and Yorkshire & Humberside.
What affects our saving behaviour?
- Lower interest rates: 11% would save more, 20% would save less
- Property market changes: 10% would save more, 11% less
- Stock-market turmoil: 4% would save more (welcome, Fools!), 19% less
- The euro: 3% would save more, 11% less (why on earth, given the uncertainty entry would cause, would you choose to save less?)
- Life-changing event: 13% would save more, 24% less following a birth, marriage or house move
- New job or promotion: 34% would save more, 6% less
So, there you have it, and what a mixed bag we are too! But if you want to improve your saving, budgeting and borrowing skills, read on...
More: How To Save | Tax-Free Saving | Saving For Children | Dynamite Your Debts
