Recession Hasn’t Affected Saving Habits
According to new research the amount we put away in our savings hasn’t changed much in the last few years, despite the recession and the lower interest rates that you might think would stop people from putting so much away every month.
People were putting away around 6% of their yearly income in 2005 and are still putting away around the same amount in 2009, according to National Savings and Investments.
Despite little happening in terms of the amount, the NSI believe that the actual reason for people to save has shifted. Previously people tended to save up for holidays or other special occasions whereas now savings are used more as a ?safety net? or an emergency sum of money.
The figures also show that people are paying off their debts more than ever.
Borrowing on cards has risen by over ?100 million in the last month but that?s balanced out by a huge ?731m fall in consumer credit ? the biggest ever recorded. Less people are getting credit in the form of things like bank loans, car loans, and hire purchase agreements from catalogues or HP stores. Adrian Lowcock of BestInvest said:
“Considering interest rates on savings accounts are at such low levels, investors are using their money to greater effect, paying off mortgages and investing in assets that produce a higher yield than cash. Debt levels have come down and many investors have taken advantage of the new Isa allowances introduced in October.”
Obviously the fact that people are continuing to save and get themselves out of debt is great news. However, it will be some time before interest rates rise and savers really see any advantage in their continued saving habits.