Brits saving less

As the Post Office marks its 145th year as a home for the nation’s savings; research into today’s savings behaviour compared to yesteryear reveals that we’re saving less than our counterparts did last century.

In 1861 Lord Palmerston’s Government launched the Post Office Savings Bank as a means for ordinary people to save. In its first year, the average deposit made was £9.45 (a fifth of a skilled workers’ salary) which is the equivalent of £445.75 today. This compares to average savings in 2006 of £778 per adult, of which just £172.69 was put aside from current disposable income.

Overall, one in four (24 per cent) people today don’t save at all and a third (32 per cent) save infrequently. In contrast, 70 per cent of adults play the National Lottery on a regular basis, meaning we’re more likely to play the lottery than save regularly.

The majority of savers (56 per cent) say they are not saving for any particular goal, just “the future”. The single biggest reason for saving is for a holiday (29 per cent).

A third (35 per cent) of 18-24 yr olds are saving for a deposit on a home, while almost half (48 per cent) of those aged 55 – 64 are frantically topping up their retirement savings.

Lack of spare money is the main reason for not saving today (71 per cent). For 27 per cent of people there are just too many debts to pay off, while 17 per cent say they just spend all their money before they can save it.

The Post Office has produced a historic savings time line to chart the UK’s savings habits.

It reveals the savings ratio - the proportion of post-tax income that households save rather than spend - has varied significantly over the years. The highest peak at 12.4 per cent was in 1980 (along with high inflation). One of the lowest periods occurred between 1946 and 1955 during the post war slump when the savings ratio only entered positive territory once (0.3%) during Queen Elizabeth II’s coronation.

With the savings ratio now at 2.1% - its lowest point since 1959 - the Post Office is using this anniversary as a timely reminder for people to remember the importance of saving.

Post Office head of savings Richard Norman said: “With over 145 years experience, the Post Office has seen many savings trends, but it is worrying to see we are now saving less than forty years ago – as little as 21 pence in every £10.

“However, we are hoping to see an increase in deposits over the next few months. At 5.75 per cent, base rates are at their highest level since March 2001, meaning savers with accounts that track the base rate can hope to get a decent return on their money. It’s also a great opportunity for those who haven’t started saving yet – especially if rates rise even further.”

Since the launch of the Savings Bank the Post Office has continued to play a key role in helping people save. Whether it was supporting the war effort in 1916 with the introduction of War Savings Certificates, or the launch of the infamous Blue Savings Book in 1966, which went on to achieve legendary status.

Post Office Instant Saver, the Post Office’s instant access account, launched in 2006 and currently offers a rate of 6 per cent. It guarantees to remain within 1.0% of the Bank of England base rate for the life of the account.

Instant Saver is available at all of the UK’s 14,000 Post Office branches, by telephone and online. Withdrawals can be made both at branches and ATMs, offering unrivalled choice and convenience.

To find out more about Instant Saver, log onto postoffice.co.uk.