Dramatic fall in level of savings

Excluding pension contributions, UK adults are saving on average just 5.9% of their gross income each month, while 37% of people claim they are unable to save anything at all. Younger and older people find it the hardest to save as 43% of those aged under 24 and 41% of those over 65 are saving nothing. Sainsbury's Finance is urging people to review their savings and pick an account with a track record for paying consistently attractive rates.

The new research from Sainsbury’s Finance shows that those in work are saving just 6.6% of their income compared to 4.8% for those not in work. The percentage of those not saving anything in these two groups is 33% and 41%, respectively.

The findings indicate that only around 6% of people are saving more than a year ago, with 16% saving less. However, some people are saving considerably less. Some 3.74 million people (8% of the adult population) are saving over 20% less than they were 12 months ago, with just over half of these people (2 million) saving over 50% less. Only 1% of people are saving over 20% more than they were a year ago.

For those people who have reduced the amount they are saving in the past year, the main reason cited was that the cost of living has increased (47%); this was followed by a change in personal circumstances (16%); and personal debts (14%).

On a regional basis, people in Yorkshire and Humberside are saving the least, putting aside on average 4.7% of their monthly income into savings, while people in the East Midlands and Anglia are saving the most at 6.7%.

Neil Cameron, Savings Manager, Sainsbury’s Finance, commented: “Many people are clearly finding it difficult to save, with a worrying number unable to set aside anything at all. It is concerning that many people have decreased the amount that they are putting aside in savings since last year.

“At the very least, it is advisable to have money set aside for emergencies and recommendations vary from saving 10% or more of your salary to having at least three months’ salary readily available. For those whose personal circumstances and the rising cost of living are making it difficult to save it's important to pick an account that provides a consistently attractive return so that your savings are working their hardest for you. We hope that by enabling people to save from as little as £1 a month they'll be more likely to get into the savings habit."