Over a third have less than a month’s income in savings

The latest Lloyds Bank Savings Index shows a stable picture for the nation’s savers, yet despite the continued economic improvement, savings levels remain low. Half the population (50%) have less than two months’ income, in savings, which, based on average UK full time earnings, is less than £4,308. This figure includes 35% of people who have less than £2,154, or one months’ income saved.  Only 16% of the population have more than four months’ of income in savings, which equates to savings in excess of £8,616, based on the average full time salary.

Despite low levels of savings, people understand the importance of saving more for a rainy day; with almost nine in ten people (87%) saying it is important to have a minimum amount to protect against unexpected costs.

Half (50%) say that they would need at least two months worth of income (£4,308) in emergencies, with this figure being made up of almost a quarter (22%) who would need four months’ income or more.

A lack of spare money remains the biggest reason for not saving

Just under a third (32%) can’t save due to a lack of spare money, yet despite this figure being the main reason for not saving, it has reduced significantly in the past year. In Q3 2013 this figure was 11 percentage points higher at 43%.

The number of people who have been able to save remains stable from previous quarters, with 26% stating they are able to save regularly throughout the year. Just under a third of people (30%) haven’t been able to save at all however.

Philip Robinson, Lloyds Bank Savings Director comments: “Although confidence in the economy is improving, one in three of us still have less than a months’ income in savings. People do recognise the importance of saving and if they are able to get in the habit of putting away small amounts each month, the rainy day savings pot will grow as their circumstances improve.”

The outlook for savers

Attitudes towards savings remain similar to previous quarters, with 86% agreeing that it’s important to save regularly. In addition 84% of people would rather pay off debt before they start to save, with this figure being stable over the past year. Two thirds (66%) expect to save ore over the next 12 months, up 2 percentage points on a year earlier. Just under a quarter (24%) think they will save less in the next 12 months or stop saving altogether.