New research by ISA provider Scottish Friendly and Centre for Economics and Business Research (Cebr) shows that people are looking to save more income than ever after the pandemic. And while 25-34-year-olds are likely to save more than other groups (55% said they’re working on saving more income), 39% of Brits – about 20 million – of all ages are doing the same.
“[This] points to a dramatic step-change in the behaviours of younger adults in the UK who are set on maintaining a more regular and more substantial savings habit,” says Kevin Brown, savings specialist at Scottish Friendly.
Does a crisis always push people to save more of their income?
Economic downturns have always pushed savings rates up, according to the Cebr report. For example, a year before the crisis of 2008-2009, UK households were saving about 8% of their income. The saving ratio went up to 9% during the downturn. A year later, the average household saving ratio was 12%.
The numbers were even more impressive in 2020. UK residents were only saving 7% of their income a year before the pandemic. But savings shot up to 18% during the worst of the economic downturn.
What are Brits doing with their savings?
The pandemic has not only driven people to save more income, but it has also changed what people are doing with their hard-earned savings. “The pandemic and the subsequent increase in people’s interaction with saving has also influenced the way in which people save,” says Brown. “There is evidence that people are thinking more about how to maximise their savings and possibly rely less on cash as it currently offers very little if any reward.”
Before the pandemic, current accounts and saving accounts were the favourite options for saving money, according to Scottish Friendly. But during 2020, cryptocurrencies have seen a huge jump, with 21% of savers taking a chance with them.
Commodities (16%), stocks and shares ISA (12%) and international shares (11%) have also seen big growth.
On the other hand, fewer people are planning on saving their income into savings accounts or fixed-term deposits. Before the pandemic, 33% were just leaving their money in a current account. That number is expected to fall to 31% after the pandemic.
Are you ready to save more of your income?
Regardless of what you’ve been doing during the pandemic, you can still make plans to save more of your income going forward.
Saving money doesn’t have to be hard. Making small changes to your budget can lead to significant savings over time. This is especially true if you plan to invest that money so it can continue to grow over the months and years ahead.
If you haven’t yet, start by setting up a budget so that you can understand where your money is going. This will help you reduce expenses so that you can save more.
If you need help getting inspired, look into savings challenges or make a list of goals. Knowing what you’ll do with all the money you save can be the push you need to finally get going.
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