By Daniel Hunter
The latest Lloyds Bank Savings Index shows a stable picture for the nation’s savers; however it does highlight the low level of savings that consumers currently hold. 36% still have less than one month’s income saved, and 27% will either save less or stop saving altogether over the next 12 months.
In terms of amount saved, 36% of respondents indicated this was less than the equivalent of one month’s income. This figure is driven primarily by the 25-54 age group, where 40% indicated savings level equivalent to less than a month’s income. On this metric, Londoners fare slightly better (29%), while those in the North East, Yorkshire and Humberside worse (40%).
Overall, 15% of respondents indicated they did not know their current level of savings. In Q3 2013, 27% of consumers think they will save less or stop altogether over the course of the next year. However, this sentiment has been gradually improving since Q4 2012, when the Lloyds Bank Savings Index launched, when this figure was at 32%.
The number of consumers who have been able to save remains stable, with 24% stating they are able to save regularly throughout the year.
Attitudes towards savings remain similar to previous quarters, with 88% agreeing that it’s important to have a minimum amount of savings to protect against unexpected costs or changes in circumstance. Nonetheless, only 49% of consumers feel they have enough to cover unexpected outgoings.
Saving for the rainy day fund continues to be a challenge, with many consumers saying they are unable to save because they simply do not have spare income. Of those who had not saved in the past 12 months, 43% stated it was because they had no money left at the end of the month, with the 45 to 54 year olds accounting for 30% of this group.
The number of consumers who state they needed to dip into their savings more than once over the course of the year remains stable, with 55% of those that have saved in the last 12 months doing so. Of those who have withdrawn from their savings account, the most common reason is to pay for a holiday or unexpected outgoings.
Those in the Midlands and London feel most strongly that saving regularly is important. With 86% of people in these regions agreeing, these areas are 2% above the national average. The Wales and West region is 2% below the national average at 82%.
Those in the North East, Yorkshire and Humberside are ahead of other regions when it comes to wanting to repay outstanding debts, with 85% of respondents saying they would prefer to pay off any debt that they owe before they start saving. Those in this region have the least amount of savings, with 50% of respondents having the savings equivalent one month’s income or less.
52% of those living in Greater London say they have enough savings to cover any unexpected outgoings or change of circumstances. This compares with 47% in the Wales and West region and the North East.
Those in the Wales and West region are less keen to save than the rest of the nation, with 21% indicating that they would rather spend than save. This is 5% below the national average. Those in Scotland are 7 points above the national average, with 33% indicating they would rather spend than save.
Andy Bickers, Savings Director, Lloyds Bank comments: “Many consumers are still feeling the squeeze; this means they don’t have the spare money to put into savings. However it is encouraging to see that the vast majority of people feel that it is important to save regularly, and the amount of people saving has remained stable again this quarter.”
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