But, how do we do this? Are there simple steps we can take to help turn the UK back into a nation of savers?
According to the latest figures from the Office of National Statistics (ONS), in 2017 saving levels fell to their lowest point since records began over 50 years ago, with the households’ saving ratio dropping to 4.9% as households’ spending exceeded the growth of households’ income.
In addition, the ONS figures show that last year UK householders were net borrowers for the first time since records began 30 years ago, turning us from a nation of savers into a nation of borrowers.
Clearly, no one wants to be in debt and we would all like to borrow less and save more, so where do we start?
Firstly, savings habits have to be learned. Thankfully, personal finance has become a mandatory part of maths and citizenship lessons in secondary schools, with many educators recognising the importance of introducing these concepts to children as early as possible. The good news is that it’s never too late to start learning. There are plenty of resources out there to help us establish better savings habits, no matter what age we are. For instance, the Money Advice Service provides a host of information, hints and tips such as saving 5% of your income.
Secondly, shopping around is key. It sounds so simple, but it’s a task easily overlooked. Wherever possible we should be reviewing our mortgages, loans, credit cards and other sources of borrowing to ensure we are on the best possible rate. After all, if we can cut the interest rates we pay to borrow, we will have more to save.
While the Bank of England recently voted to maintain the Bank Rate at 0.50%, market commentators are speculating that this is likely to increase this year, maybe even as soon as May. In time, this could help push interest rates up, meaning savers could get a greater return on their cash. We hope this will encourage more people to save and help lift the savings ratio up once more.
Find out more about our Personal Savings and Business Savings accounts.
Stuart Hulme
Director of Savings and Marketing