Do you have a rainy day fund, and if yes, where do you keep your money? Our finances and saving habits are an essential part of our lives, but are something we tend to keep very private. And yet how we collectively deal with money is very indicative of the overall financial health of the nation.
A survey of 2,000 adults conducted by savings experts Shepherds Friendly (opens in new tab) reveals some uncomfortable truths about the state of saving habits in the UK. The first, and probably most uncomfortable revelation is that well over half of us (61 per cent) wouldn't last a year if we lost our incomes, with only 42 per cent able to save anything at all every month.
These grim figures partly reflect the rising living costs and the unsustainably high rent costs in relation to average incomes, but the data suggests that some of our financial woes also come from a lack of financial savvy.
Over 30 per cent of respondents do not budget their spending, although 46 per cent would like some advice on how to do so and would use the internet to find some advice. There also appears to be a lot of confusion about how to make the most of one's savings. While 62 per cent of the respondents had a savings account, more people stored their cash in a jar than in an investment ISA (21 and 14 per cent respectively). Cash ISAs are twice as popular as investment ISAs, despite the fact that given the current low interest rates, an investment ISA is more likely to bring in more income over time.
Even more strangely, when asked what they were saving for, 27 per cent replied 'nothing in particular', revealing a lack of long-term financial goals. People who do know what they're saving for mostly want a nice holiday (30 per cent), with surprisingly few of us even bothering with long-term goals such as buying a home (12 per cent were saving for a deposit) or having a comfortable retirement (16 per cent were saving to this end).
These somewhat apathetic attitudes towards saving must be at least partly the result of an uncertain economic climate, low interest rates, and the decline of home ownership. It seems that for many of us, facing an uncertain future has made us refocus on shorter-term pleasures such as nice holidays rather than long-term plans.
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