Member Article

Year’s savings just £40

People have an average of only around £2,000 in savings after managing to set aside less than £40 during 2009, new research has shown.

The average person holds £2,205 in a savings account, the equivalent of 1.7 months’ take-home pay, according to savings provider ING.

The group said the figure was only around a tenth of previous estimates for average savings levels, which typically come in at around £20,000.

But it claimed the higher figure was distorted by the fact that the wealthiest 5% of the population held around a third of consumers’ total savings.

It said once this group was stripped out of calculations, the average person had just £2,205 set aside, after increasing their savings levels by only £38 during the whole of 2009.

Johan de Wit, chief executive of ING Direct, said: “We wanted to understand better just how much ordinary people in this country have saved, because no existing measure really tells us this.

“The official ONS Household Savings Ratio does a good job but is designed for economists by economists.

“For example, it treats mortgage repayments partly as saving, but ordinary people see this as their biggest monthly bill. Other measures of saving are distorted by the high balances of the very wealthy.”

The group said people had neglected saving during 2009 as they had instead focused on paying down unsecured debts, such as credit cards and loans, and making overpayments on their mortgages.

David Wilson, Director at North East debt and financial advice company NE Money, said: “It’s been increasingly difficult for people during the past 18 months to even consider savings when we look at the debt levels Brits have and the ever-increasing cost of living.

“Savings are seen as a luxury to a lot of people, and whilst they would like to save for that rainy day or special something there is simply no way for them to do this. Above all else people should understand their budgets closely and even if it is £40 a year; something is better than nothing!”

This was posted in Bdaily's Members' News section by Ruth Mitchell .