A regular savings habit
 

A recent report from UK Savings Week has found clear evidence that having a savings habit improves our overall wellbeing. Regular savers feel more optimistic about the future, have an ability to relax and to sleep better at night, and are more satisfied with their life generally. They are also more likely to achieve big life goals, such as buying a home. 

In contrast, those without a nest egg to fall back on are more likely to have fallen behind with their bills and have higher debt-to-income ratios. Sadly, there are around 14 million people in the UK in this position, with less than £100 to fall back. 

How to build a nation of savers
 

The report found evidence that savings schemes and incentives encourage better savings habits. 

For example, workplace savings, where individuals save a little at the start of each month directly from their salary - and crucially before money goes into the household budget – achieve higher levels of savings success.  Many people recognise the simplicity of building savings in this way, with research showing that more than 50% of us would be interested in a workplace savings scheme if our employer offered one. 

The Building Societies Association (BSA) is therefore calling on the new government to enable auto-enrolment into workplace saving schemes for organisations with 250+ employees. This could lead to a huge increase in the availability of workplace savings schemes, and ultimately help people to realise the short and long-term benefits of having a savings habit.

Other savings incentives were also proven to be effective. Online nudges and encouragement texts were found to increase the engagement people have with their savings, leading to better savings habits. To make the most of these behavioural influences, financial organisations should continue to design products and incentives that encourage and reward good savings habits. 

There is also more the government could do. Small changes that could have a big impact on people’s financial resilience and overall wellbeing. 

Examples, include clarifying the future of the Help to Save scheme to ensure it continues to support low-income savers beyond 2025. The government should also break down the penalties and barriers in Lifetime ISAs to ensure they remain fit for purpose and enable more young people to take the giant step into homeownership. 

Get involved
 

UK Savings Week is a campaign where organisations, including building societies, banks, credit unions and charities, come together to support and encourage individuals to have better savings habits. This year’s UK Savings week will run from 9-15 September 2024. 

For more information on UK Savings Week, or to get involved, please email Andrew Gall at uksavingsweek@bsa.org.uk.