Naughty savers treat themselves

The UK is a nation of naughty savers who regularly dip into their savings for treats, even though most tuck their money away for specific reasons.

moneysupermarket.com research reveals two thirds of people who save have no qualms about dipping into their savings for special treats. Among key reasons for saving were to provide peace of mind (54 per cent) and to save for the future or for retirement (53 per cent).

The research reveals people who save are more likely to dip into their savings for a treat than for unforeseen necessities, where only 56 per cent of people turn to their reserves.

Kevin Mountford, head of savings at moneysupermarket.com, said: “It’s interesting to see many savers full of good intentions can’t resist a sneaky dip into their cash to treat themselves – and that treats take priority over necessities that can’t be planned for, such as a car repair or a washing machine to replace the one that’s just packed up.

“There is no harm in this as long as there is an element of control – constantly dipping in will leave saving a pretty defunct purpose, and those hoping for peace of mind or a wealthy future may find the prospects of this much reduced.

“Those who struggle to be strict with their saving but need to avoid dipping in should consider a bond, which ties money up for a set period of time, or a notice account, where a number of days notice has to be given before access to the money is granted.”

Nearly two thirds (64 per cent) of 45 to 54 year olds who save do so for their future, showing this is the watershed age for thinking about how much money might be needed to retire on. Half of 18 to 24 year olds who save are doing so for something special such as a holiday or car, and 28 per cent of 18 to 34 year olds who save are squirreling their money away to buy a house.

Kevin Mountford added: “There is no doubt it’s a good time for those with cash to spare – savings rates look good and some are still being driven up by fierce competition and the need of some providers to increase retail deposits.

“My concern with the number of people dipping into their savings is a number of these headline rates drop to appallingly low levels when withdrawals are made. This is more worrying as we approach winter when people might turn to their savings to pay for increased fuel bills or Christmas presents. People should check the conditions of their account before they take the plunge and consider if they really need to withdraw the cash from their savings pot.”

In other findings, 60 per cent of Londoners save for peace of mind compared to 52 per cent in the North of England. Eighteen per cent of Londoners save to buy a house, as opposed to four per cent in Scotland.