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Press releaseMAJOR NEW SURVEY ON BRITAIN'S SAVINGS HABITS FROM NS&I 08 December 2004'Young and Determined Savers' look set to revitalise the nation’s savings culture A major new quarterly analysis of the way British people save and invest is being launched on 8 December by National Savings and Investments (NS&I). In its first publication, the NS&I Savings Survey finds that the young in Britain are facing up to the reality of the tough financial climate with determination, and are leading the way as the nation’s best savers. The NS&I Savings Survey includes research undertaken between September and November 2004 and examines savings patterns during the quarter, as well as likely saving patterns in the next quarter (December 2004 - February 2005). KEY HIGHLIGHTS SAVINGS TRACKER: how have Brits been saving over the past three months?
PROPENSITY TO SAVE: how will Brits save in the next three months (December 2004 – February 2005)?
HOUSING: gloom for first-time buyers, but glimmer of hope for future. (See separate NS&I release*)
Dax Harkins, senior savings strategist at NS&I, commented: “It is encouraging that the young are showing a greater sense of responsibility for their financial future. The savings gap is likely to have an impact on most people, but perhaps this new generation will be more prepared. “The savings ethic shown by those more financially vulnerable groups, may be born of necessity, but shows there is an active desire not to be part of today’s culture of debt. “We are intrigued and encouraged by the results of NS&I’s first quarterly Savings Survey and will be monitoring trends in the UK over the next quarter with great interest.” THE SAVINGS TRACKER IN DETAIL Against a backdrop of the savings gap, retirement savings issues and escalating house prices, the first NS&I Savings Survey reveals that 16-24 year-olds are the nation’s best savers by a considerable margin. They are saving regularly, saving the highest average proportion of their income (9.8%), and have the clearest savings goals when compared to all other age groups. 58% of Young And Determined Savers, or YADs, saved regularly during the quarter, putting aside an average of £134.61 per month. The next best savers were 25-34 year olds, saving 8% of monthly income. This compares to the national average of 6.7% of monthly income saved regularly. The older age groups fared less well. When asked how much they would ideally like to save, YADs also showed the greatest desire to save more. They would ideally like to save almost 19% of their income, compared to the national ideal figure of just over 14%. This, say NS&I, shows that more young people, than any other age group, realise that they need to save for their futures. The best savers The NS&I Savings Survey also reveals that after the young, it is singletons and part-time workers who have the strongest savings ethic. Perhaps out of necessity, they all either saved or desire to save higher proportions of income than any other groups.Three quarters of 16-24 year-olds also had specific goals for their savings, compared to only six in ten nationally. Their top savings goals were home purchase/mortgage payment (14%), higher education (13%), and a car (13%). Nationally, savings goals are rainy day (13%), holiday (11%) and retirement (10%).
Socio-economic surprises – those who have to, save most Analysis of socio-economic factors reveals that the strongest savings ethic is found in those groups that perhaps feel most vulnerable financially –singletons and part time workers. Singles save 8.9% of income, compared to 6.3% for those who are widowed/divorced or separated, and 5.9% for those who are married or cohabiting. Part time workers saved 8.0% of income, compared to 7.2% for those in full time work and 5.5% for those who are not working. Of socio economic groups, DEs have the highest savings targets – 17.4% of income, compared to ABs, who have the lowest target of 12.4%. And, while ABs saved 7.0% of their income on average, DEs saved an impressive 6.2% of their much lower average incomes. Similarly women are saving almost the same percentage of their lower average income as men (6.6% compared to 6.9%). Women also have a greater aspiration to save than men, wishing to put away 15.70% of income, men only 13.57%. Regional trends – North leads Savers in Northern regions saved more of their income than those in the South. Yorkshire and Humberside saved the highest proportion of monthly income 8.4%, followed by Wales 7.9%, the North East 7.3%, the North West 7.2% and Scotland 7.2%. In contrast, London saved 6.9%, the East Midlands 6.6%. the South East 6.2%, the South West 5.9%, the West Midlands 5.8% and East Anglia the lowest proportion, 5.0%. This is likely to reflect the greater cost of living (including housing) in the South.Table 2: Regional trends
Savings Products An interesting finding through comparing all the savings products available in Q3 2004 showed that overall Cash Mini ISAs are still offering the best rates consistently. Instant access accounts show the largest variation in interest rates, being one of three account categories with a lowest rate of 0.10%, although the top rates are competitive. PROPENSITY TO SAVE RESULTS IN DETAIL Propensity to save is measured as an index of between -100 and +100, showing the likelihood of people across the country saving more or less between December 2004 and February 2005. This is defined as the difference between the percentage of people saying they would be more likely to save over the next three months, minus those indicating they would be less likely. Monthly data shows that people have been gradually abandoning their plans to save more, perhaps in the run up to Christmas. In November, the index showed –18%, indicating a considerable increase in the number of people who thought they would be less likely to save over the next three months. The large disparity between the savings outlook of different age groups may also be a Christmas effect. With a net balance of +24%, 16-24 year olds are expecting to save more, which may reflect the fact that the young have fewer spending responsibilities over Christmas and will, therefore, be in better financial health in January than other age groups. They may be planning to stay with family over Christmas and hope for money as presents. Those among them still studying may also have lined up a holiday job. The 35-44 year olds, who are likely to have young families and hosting Christmas, have the lowest expectations of saving (-21%). Sobering evidence of this need is illustrated by first time buyer research also issued today by NS&I. It now takes 4.5 years – six months longer than in Q1 2004 and longer than ever before – for first time buyers to save for a house deposit*. ENDS
Notes to Editors * See NS&I release ‘First time buyers now take four and a half years to save a deposit’
Further information from the Savings Survey Socio economic groups
Monthly savings increase
Current total savings The average amount held in savings, excluding pensions, was £16,454. The amount people think that they should have in savings is 56% higher at £25,717. 10% have no savings.
Small savers and super savers There is a significant divide between those who are saving modest amounts monthly, and those who are saving significant sums. 19% of regular savers are saving less than £99 per month, and 10% of regular savers are saving over £300 per month. Super savers – those saving over £300 per month
Small savers – those saving less than £99 per month
What are people saving for?
Savings as a percentage of income (Average saved per head / (man income / 100) By age:
By socio-economic group:
By working status:
By marital status:
Dax Harkins is available for interview and high resolution photographs can be supplied. Contact the media team to arrange an interview or request photographs by e-mail.
For more information, contact the NS&I media team
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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