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Savings suffer as Britons lack financial confidence

Britain's savers say increases in the cost of living are making saving harder than ever, according to research by specialist financial mutual, Wesleyan.

More than one in four (28 per cent) say they are saving less than this time last year, compared with only one in five (20 per cent) who are saving more.

The sharpest fall was among millennials, with a third (33 per cent) of those aged 25-34 saying they are now saving less than a year ago.

Wider economic and political events, including Brexit, over the past year are also having a bearing on savers' confidence. A fifth (21 per cent) admit Brexit has made them more cautious and changed their attitude towards risk.

Elsewhere, savers are prioritising short-term purchases over long-term saving - 23 per cent are saving towards a holiday and 16 per cent are saving for a new car, compared with just 15 per cent saving towards retirement.

Britain's priority savings goals include:

  • Rainy day fund (27 per cent)
  • Annual holiday (23 per cent)
  • New car (16 per cent)
  • Retirement (15 per cent)
  • Home improvements (13 per cent)
  • House deposit for first home (12 per cent)
  • A house move (additional costs) (9 per cent)
  • Child's school/university fees (8 per cent)
  • Wedding costs for themselves or their children (7 per cent)
  • Once in a lifetime holiday (6 per cent)

The findings from the study also revealed that despite ISAs being the previous go-to option for savers, just a third (33 per cent) of people are using ISAs for long-term savings.

Interestingly, one in five (22 per cent) are using their current account to hold their long-term savings, further evidence that people want access to their money quickly and easily, rather than locking it away.

Vicki Wentworth, Chief Customer and Strategy Officer at Wesleyan, said: "Savers are feeling increasingly squeezed. The cost of living keeps rising and they're finding themselves with less and less each month to put away for the long term. Given the broader economic and political context it's not surprising that people are lacking confidence about their saving potential, and this has led to an interesting shift with more focusing on short-term financial goals.

"Despite this reaction, savers shouldn't lose sight of the need for long term financial planning. Even with continuing low interest rates there are steps they can take to invest in their futures and make the most of their money, particularly for retirement."

"Speaking to a financial adviser can ensure savers are making their money work for them, making the best decisions to maximise their returns."

The research also found a regional divide between savers. People in the East of England reported feeling most optimistic, with more than a quarter (29 per cent) saving more now than this time last year. But it's a different story in Scotland, where just nine per cent are saving more now than previously.

* The research was conducted by Censuswide in January 2017 and questioned 2,624 respondents

'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

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© 2018 Wesleyan Assurance Society