Pensions - Articles - Attitudes to saving creating financial precipice

 Although 63% of Britons are managing to put something away, nearly a third (32%) have a
 total pot of less than £1000, which is less than the UK average combined monthly mortgage
 and council tax costs (£1009). In addition, almost one in five of those who expect their
 financial priorities to change are seriously concerned about job security for the coming year.

 These statistics paint a bleak picture of people’s ability to cope with financial shocks that
 could hit now or in the future.

  

 Families shoulder the burden

 A quarter (25%) of respondents with families have loaned ‘a substantial amount’ to their
 children, often to simply help them meet daily living expenses. Support is also provided for
 higher education and property purchases, with an average loan of almost £15,000 – an 11%
 increase from the amount reported last year. Interestingly, when asked what they’d rather
 give their children money for, parents opted for helping them get on to the housing ladder
 (63%) over university fees (21%).

  

 This level of support is having a stark impact on parents’ finances with a quarter (24%)
 cutting back on their savings and almost one in ten (8%) stopping saving altogether.

 However, it isn’t just parents funding their children; whole families are pulling together to
 support each other. The report shows that grandparents are helping their grandchildren;
 children are lending money to their parents, and siblings are also supporting each other.
 Specifically, on average grandparents have lent £3,665 to their grandchildren, 6% have lent
 to their parents with an average amount of £4,371 exchanging hands and 9% of people have
 lent an average £3,485 to their sibling.

  

 The savings shortfall spiral

 The wider economic climate is also increasing the pressure on those struggling to save. 30%
 of people report that they have been forced to cut back on their savings by rising costs,
 whilst a further 27% are saving less than two years ago, principally due to a lower level of
 disposable income. Across the board, the majority (64%) of people report that having no
 money available is a major barrier to saving.
  

  

  

  

  

 Iain McGowan, Head of Savings and Investments at Scottish Widows said:

 “People clearly recognise the importance of saving something towards their future financial
 wellbeing, which is encouraging. The importance of building a safety net for themselves and
 their families is a priority, with 63% of people reporting that they managed to save some
 money in the last 12 months. However, just a quarter of those people believed they were
 saving enough to meet their long-term needs; with a further 37% saying they would definitely
 not be achieving this goal.

 “When we are faced with immediate financial commitments, such as mortgage payments
 and day to day living expenses, then it is absolutely necessary to give these pressing needs
 priority. However, taking a wholly short-term view of our finances will mean we are
 unprepared for the financial needs and challenges that lie ahead in the future.”