The Future Of Our Savings

A new report is predicting how our saving habits will change over the next 50 years. It looks like we still won't have the savings bug!

A report was released last week by Future Foundation investigating how the way we save has changed from 1957 to today, and how it might look in 2057. Although it predicts we'll be saving more, as a nation it looks like we'll still be savings stragglers.

How much we save each year

Back in 1957 Britain did not have much of a savings culture, due to rationing after the Second World War. In fact, we were saving just 1.5% of our disposable income back then, and the savings ratio was negative in many of the years between 1945 and 1957. What savings we did make were done on a weekly basis and often kept in cash or put in savings schemes like Christmas clubs where they earned little or no interest.

By the early 1960s, our level of saving had risen to 5%-6%. It then rose to around 10% from the mid 1970s to the mid 1990s, before falling back to the 5%-6% range again over the last decade. The fall in the savings ratio in the last few years is attributed to our current spendthrift nature and the wealth feeling that rapid house price gains have caused, meaning we feel less need to put money aside for the proverbial rainy day.

The report predicts the amount we save will rise from 5% today to 7% by 2057. That's a quite a slur on our savings habits I'd say. As the report points out, our European cousins still manage to save over 10% of their income.

How many of us are saving

Although people weren't saving much back in 1957, around 37% of people were managing to save something on a regular basis. Sadly, this is one statistic that hasn't improved much. Today it's reckoned only 43% of us are saving regularly and that this will increase to 50% by 2057.

Why don't more people have the savings habit? The report suggests that saving is a life stage event - in other words, it's mainly older people who save. While this is true to some extent, I suspect a bigger factor is most people just don't have the right mindset for saving. It's more fashionable to have the latest gadgets than to know how to budget and what's topping the savings Best Buy tables!

The value of our savings

As you might expect, in 1957 we had virtually no savings. In current prices, the total would have been about £250m. Today, we have £43b.

Despite this massive increase, the total amount we have saved actually hasn't grown over the last twenty years, if you adjust for inflation. This means whatever new money we'd saved and any interest we've earned over this time has been offset by the amount we've withdrawn. That's quite depressing!

By 2057 the report predicts our savings will have started to grow again and we'll have around £150b stashed away, as measured in today's prices. This will come about by us earning more and saving a higher percentage of that income.

Get the savings bug today

One of the reasons we don't make the most of our savings is we let our money languish in low-interest accounts at our local bank or building society. There are much better accounts out there though. Look for ones that currently pay over 6% interest and have an interest rate guarantee. Avoid those which have an introductory bonus that lasts for less than a year or a restriction whereby you get no interest in any month you make a withdrawal.

Our savings guide can help you decide which sort of account suits you best and then you can apply online in our savings centre.

More: When Saving Gets Sexy