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Taking up the savings habit - More 18 - 24 year olds saving than any other generation

POSTED: 17th July 2017
IN: Newsroom
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  • Research finds that on average the nation is saving 8% of their pre-tax income – £1,832 a year
  • Three quarters (74%) of 18-24 year olds are saving (compared to 69% nationally)
  • The lowest paid are saving the largest proportion of their income – those earning up to £10k a year are saving 15% on average
  • Despite Londoners being the highest earners, they are only saving a slightly higher ratio of their income compared to the lowest earners (Wales)
  • Over half (56%) of savers in the UK do not feel they’re saving enough and almost a third (31%) of people are not saving at all

Young adults are more likely to be saving regularly than any other generation in the UK, according to the first annual savings index from specialist bank, Aldermore. 

While many 18-24 year olds will be focused on getting their education and establishing their careers, they are still managing to save 10% of their annual income.  Although they may not be saving the largest amount (an average of £1,160 annually), almost three quarters (74%) of 18-24 year olds are saving, compared to the national average of fewer than seven in ten (69%).

When it comes to the UK’s savings habits, the nation is putting away less than a tenth (8%) of pre-tax income on an annual basis. The report shows that although the savings message appears to be resonating, on average the nation is only saving £1,832 annually, equating to £153 a month. This means long term savings goals such as buying a home could take a significant amount of time to reach.

Regional savings difference

From a regional perspective, it’s no surprise that London saves more than any other region (on average £2,990 annually) given earnings are higher than the rest of the U.K (average salary of £30,734), however it appears that a higher income doesn’t lead to people saving a larger proportion of their earnings. Savers in Northern Ireland and Wales are managing to save the same ratio as the rest of the UK. In Wales, people earn on average over three-fifths (63%) less than Londoners (on average £18,865 annually) and yet are still managing to save 8% of their income, £1,429 a year. 

Region

Average pre-tax income

Average annual savings

Savings Ratio

West Midlands

£19,706

£2,008

10%

London

£30,734

£2,990

10%

South West

£19,884

£1,795

9%

South East

£23,028

£1,740

8%

Yorkshire & The Humber

£21,210

£1,684

8%

North West

£20,395

£1,623

8%

East Midlands

£19,772

£1,597

8%

East of England

£19,661

£1,506

8%

Wales

£18,865

£1,429

8%

Northern Ireland

£18,282

£1,504

8%

North East

£20,548

£1,338

7%

Scotland

£20,857

£1,557

7%


Higher earnings doesn’t necessarily mean higher savings

Overall, those who earn more actually save less of their annual salary towards their personal savings than those on a lower income. The research shows that those earning over £40k put away 10% (£5,785) of their income, whilst those earning up to £10,000 a year are managing to put aside 15% annually (£759). However, those on a higher income (over £40k a year) are more likely to save regularly, with over a third (36%) saving on a monthly basis (compared to the national average of 29%).

A nation not saving enough

Whilst the majority of the nation has caught the savings bug, the research found that nearly a third of people (31%) are still not saving at all, with almost seven in ten (69%) non-savers stating that they simply do not have enough left over at the end of the month. In general, the ongoing low interest rate environment doesn’t appear to have impacted savers, with just over one in ten (13%) saying there’s no point saving anymore because of low interest rates. One in ten (9%) non-savers would rather spend the money they earn on living life, than saving for the future.  Those in the North East are less likely to save than any other region, with more than a third (34%) not saving anything at all. 

Even those who are saving claim they would like to put more away, with over half (56%) of savers feeling they are not saving enough on a monthly basis. This rises to three-fifths (60%) of women and almost three quarters (74%) of 18-24 year olds. Just over two fifths (44%) of 55-64 year olds believe they should save more.

Commenting on the study, Simon Healy, Managing Director - Savings, Aldermore says: “Although almost a third of the population (31%) currently do not save anything at all, our new analysis shows that for the majority, the savings message is resonating, despite the low rate environment over recent years. It is encouraging to see that people on low incomes and the younger generation are actually some of the best at saving, the earlier people start savings the quicker and better chance they have of reaching their savings goals in later life.

“However, it’s clear that this can be hard with many people feeling that they are not saving enough particularly at a time when wages are not increasing in line with the cost of living. We hope that we can encourage people to make even a small change in their saving and spending habits, which can go some way to provide protection for the future.

“We would always advise savers to shop around to find the best savings account for their needs – even in a low interest rate environment.”

 -Ends-

Notes to editors:

4,005 online interviews with UK adults (aged 18+) were conducted by Opinium Research from 19 to 26 May 2017 The savings ratio is calculated using the mean amount saved in the last 12 months as a percentage of mean pre-tax income across the whole sample.

For further information about Aldermore, please review our Notes to Editors page

Follow us on Twitter: @AldermoreNews

For further information, journalists can contact:

Rachael Snelling, Aldermore
Phone:          0208 1853 102
Email:           Rachael.Snelling@aldermore.co.uk

Rozie Green, Lansons
Phone:          0207 566 9724
Email:            rozieg@lansons.com

 

 

 

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