Brits’ saving strategies put lockdown cash piles at risk, according to Wesleyan
New research by financial services mutual Wesleyan has found that a third (33 per cent) of women and a quarter (24 per cent) of men now plan to prioritise their savings following the pandemic. A fifth of UK adults (21 per cent) said they hadn’t properly focused on their savings before Covid-19.
But many of those gains will be lost as it emerged that cash savings accounts, where interest is typically lower than the rate of inflation, are Brits’ most popular savings option (55 per cent). As a result, many people’s hard-earned funds will gradually be worth less and less over time.
Wesleyan’s research found that savers have pocketed an average of GBP35 a month more during the pandemic, with average monthly savings increasing from GBP240.23 before the pandemic to GBP276 a month since.
When asked what has helped them save cash, Brits pointed to reduced spending on socialising (60 per cent), travel, including commuting (53 per cent), and holidays (48 per cent).
Those aged 35-44 have saved the most during lockdown, putting aside an average of GBP296.83 a month. But it’s been the very youngest savers that have seen the largest average increase in their savings rate, with 18-24s now pocketing an average extra GBP57.88 a month, compared with just GBP11.52 for those aged 25-34.
However, only 14 per cent of Brits are investing in stocks and shares – where the real-term value of their savings has the greatest chance of increasing ahead of inflation, which currently sits at 0.7 per cent. Women (10 per cent) were less likely to be investing than men (17 per cent).
Nathan Wallis, Chief of Staff at Wesleyan, says: “It is clear the pandemic has prompted many people to re-think their approach to savings. However, along with looking at how much they can put away, it’s also essential they consider where they are putting their money.
“Of course, it is important to have some savings that you can access easily for day-to-day or emergency use. But in an environment where interest rates are well-below inflation, simply storing cash in a savings account could risk the value of it shrinking over time.”
Just under one in six (15 per cent) UK adults who don’t currently invest in equities say the pandemic has made them want to find out more about investing.
Younger generations show the greatest interest, with almost a third (30 per cent) of 18-24s and a fifth (20 per cent) of 25 to 34-year-olds now keen to exploring equity investing, falling to 14 per cent for 45-54s.
Wallis continues: “Anyone who has funds they can tie up for a longer period and is willing to take some risk with their savings should consider investing in stocks and shares. There is the potential to grow your money, outpace inflation and provide new income streams.
“Savers could also consider tax-free investments such as stocks & shares ISAs, which would enable them to get even more from their hard-earned funds.”