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Time to start saving

20/10/2016

Total UK personal debt stood at £1,499 trillion at the end of August 2016, according to figures from The Money Charity, and the average household owes £9,958 in consumer credit. Contrast that with typical monthly savings levels: National Savings & Investments (NS&I) calculates that, each month, the average Briton manages to save about 8% of their average income. This equates to around £107 each month and about £1,284 per year.

However, in an environment where it has become the norm – and, until comparatively recently, all too easy – for individuals to fund their purchases with debt, changing this approach of ‘buy now, pay later’ is going to be difficult.

Right now, the main incentives to encourage individuals to boost their saving activity involves limiting the amount of tax that is payable on certain savings products. Looking ahead, the UK Government will have to step up its efforts if it is going to generate the kind of interest that will push more people to change their behaviour and commit to a long-term savings habit.

If, however, there was ever a good reason to start changing our behaviour, it is surely the fact it costs each UK household an average of £1,935 a year just to meet its annual interest payments. That is almost 4% of our average earnings that could otherwise be heading into our pockets. That fact alone really should be an incentive to think again, and start to save.
 

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