How UK Citizens Typically Feel About MoneyPersonal Finance
Our friends at MoneySite.com helped provide this insight to the Average UK citizen’s money habits
People strive to maintain the perfect balance between savings and spending proportions of income. In this respect, an issue that is gaining widespread attention is the massive shift in the trends of savings and investments amongst the newer generations. According to the latest research of 2017, 7.8 millennial have no savings or investments points to a crucial fact that many of the youngsters may not be able to save enough to lead a debt-free life.
With the changes in political and economic scenarios, Brexit has seen to play a significant role influencing the behavior and attitude of savers and investors in the UK. It is not clear why but the financial demographics of the kingdom have become more challenging and complicated for the consumers.
The Crisis and the Current Scenario
Termed as the “Saving Crisis,” the citizens of the United Kingdom are unable to save more than they would like and have thus entered a crisis. Less than 60% of the citizens, who manage to save on a monthly basis, have revealed to have been saving enough to cover expenses for hardly a month (if they were to go unemployed).
- According to a BBC Report: Millions have less than £100 in savings study finds, the consensus is that the millennials are not saving enough for the future with an average of £100 in the savings accounts.
- While, findings by The Guardian: One in four UK families have less than £95 in savings, the report finds revealed that the gap between household incomes, is increasing.
Intention vs. Saving Battle
What is further contrasting is that it has been estimated that people have become more aware of their financial needs and do understand the importance of saving money. However, the majority of the individuals and families, are unlikely to save as much they plan to which creates a conflict in the system.
The theory: The fundamental basics of economics and money regulations rest on the assumption that an individual is unable to save their money when they are spending it. Therefore, to save, individuals just need to limit their spending and constitute that proportion, towards savings. However, when applied practically, this theory can be called obsolete today.
What contrasting is that many individuals who state that they do not save enough as they would like, claim the same about their spending pattern as well. When revealing facts about their lifestyle and living conditions, these individuals stated that when they were not saving, they were also not spending enough money.
This means that the average person in the UK does not earn enough income to save or spend wisely, or living a life that is only fulfilling their basic needs. We are just talking about the working sector; the sector that only includes individuals who are employed and take a weekly or monthly (medium) salary. It leads us to believe that inflation, i.e., the buying power of individuals, is putting a much more significant strain on the economy than we anticipate.
One primary reason for this is that many individuals do not understand the difference between the concept of “savings” and “investments.”When it comes to preparing for the future, individuals regard savings and investments a single mechanism where money is put away to be used in the future. These savings can then be used for emergencies, assets to be purchased in the future or for occasional holidays.
Further contributing factors
- Age factor: Individuals from different age groups tend to have different approaches towards savings and investments.
- Brexit: Investors have revealed that Brexit is not the actual culprit, but what is more damaging is the lack of uncertainty and predictions surrounding it.
- Bonds, mutual funds: With the millennials, the long-term investments in bonds and mutual funds have decreased over time.
Time to bring a change
The current situation reveals that the savings in the UK for an average citizen are declining. However, what is interesting to note is that even though, there is a decrease in personal and long-term investments, the investments in businesses and capital ventures are on the rise.
The average citizen in the UK may not be saving enough for their personal goals, vacations, or retirement, but people are more willing to invest in start-ups, joint projects, and other small/large scale businesses.
While understanding the current state of the average saver in the UK, investors want the individuals to take an interest in savings and longer-term investments. The financial service providers are currently looking for better and more advanced ways to initiate the saving attitude in people.
One potential way to help people save is to educate and encourage people to depend upon technology for buying and selling. The availability of various apps and websites have made it convenient for individuals to learn more about the investment rates and comparison between prices. (An example is Moneysite.com that guides individuals about their investments).
To reduce the burden and stress of financial pressures, individuals are also advised to seek professional financial help to seek out their budgets and learn about their financial positions.