The amount Brits are saving this financial year is set to increase by an average of £2,000 according to new research, yet the population is missing out on millions of pounds of interest by stashing savings in current accounts and even piggy banks.
The survey by Clydesdale and Yorkshire Banks found that people are pledging to put more money away this year and will aim to save an average of £244.70 a month during the next financial year. Yet millions of Brits (20 per cent) admit to keeping their savings in a current account earning no interest, and a third (30 per cent) admit to having no idea what interest rate they’re receiving.
While 50 per cent of Brits are managing their money more sensibly, keeping their savings in an ISA, almost one in ten (7 per cent) admit that they are even secreting savings in their home or an old money box.
It seems that cautious Brits who are saving would rather put money away for a rainy day than save for a big purchase like a new car. The poll revealed the top three reasons why Brits are stashing away their cash this year. Saving for an emergency came out as the number one incentive, with holidays and having enough money for retirement being the next most popular motivators. Despite the escalating cost of university fees, only one in ten Brits are motivated to save money for their offspring, with nearly a quarter of parents (23 per cent) having nothing saved up for their kids.
Nick Cann, CEO of the Institute of Financial Planning (IFP) commented on the new research, saying: “Clydesdale and Yorkshire Banks’ poll revealed that the majority of people are keen to save even more this year and it’s encouraging that people are putting money away and preparing for the future.
“However, around 15 per cent of people have less than £500 in savings and many others are not making their money work well for them, keeping savings in their current account or even in their home. We would always encourage people to seek advice on managing their money and look at ways of making their money work harder in a savings account or high interest ISA to suit their needs.”
As the new financial year draws close, one in ten Brits admit they have more than £10,000 in savings. Those in Manchester are pledging to save the most per month this year (£373.80) whilst those in Nottingham are looking to save the least (£98). Over a quarter of bewildered Brits (27 per cent) also admitted they would not seek any advice if they were in a pickle with their finances.
Steve Reid, Retail Banking Director at Clydesdale and Yorkshire Banks said: “While it’s really positive news to see that people are planning ahead and setting themselves savings goals, it’s understandable that many people are unsure of the best options to make their personal finances work hard. Clydesdale and Yorkshire Banks have trained advisers who are here to guide and support people through the maze of information to help understand the options available.”
Clydesdale and Yorkshire Banks have launched two new, competitive fixed rate ISAs. The bonds, which offer a choice of maturity dates of 30th May 2014 and 31st May 2017, have rates of 3.6% and 4.25% Tax Free AER, respectively.
Visit www.cbonline.co.uk or www.ybonline.co.uk for information and advice about how to manage personal budgeting.