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• Regular savers are more likely to own their home, keep on top of their bills, and have lower debts

• There is a big boost to wellbeing when people start to save

• Savings schemes and incentives help encourage a savings habit

• Half of working people would be interested in workplace savings schemes

A report from UK Savings Week shows that having a regular savings habit can help protect individuals and families from financial shocks, increase their chances of achieving long-term life goals, and generally improve their mental wellbeing. 

UK Savings Week, an annual campaign aimed at getting people engaged in the benefits of saving, commissioned the University of Bristol’s Personal Finance Research Centre to look at the role of savings in promoting positive wellbeing. 

In the report, which was sponsored by Yorkshire Building Society, the researchers analysed results from a large scale, annual study of the savings habits and behaviours of individuals and households over the last 10 years. 

Regular savers are less likely to fall into debt

The analysis showed that consistent savers are less likely to fall into financial hardship. Over the 10 years to 2022, 12% of non-savers had fallen behind with their bills, compared to just 2% of those who managed to save at least every other year. 

The results also highlight that non-savers have higher debt-to-income ratios. Those who managed to save in as few as two of the survey years were a third less likely to have debts equivalent to more than 10% of their household income, compared with those who never saved. 

Homeownership is far more likely for regular savers

Using the 10-year data analysis, the researchers tracked the savings habits of a group of young adults and the significant milestones in their lives over the decade.  

They found that 82% of individuals who were regular savers became homeowners. That dropped to 40% for those who saved on an ad-hoc basis, and just 15% of non-savers were able to buy their own home in that time. 

Obviously there are various factors, such as income levels, that affect whether someone will be able to buy a home. The researchers conducted statistical analysis to adjust for this, and found that those who saved regularly were 10 times more likely than non-savers to become homeowners, after income and other factors were taken into account.

Savings schemes and incentives work

There is evidence that savings schemes and incentives encourage better savings habits, leading to improved financial resilience and wellbeing.  

Schemes such as workplace savings, where individuals pay into their savings at the start of the month before money goes into the household budget, achieved higher levels of savings success. Many people recognise the simplicity of building savings in this way, with research showing that more than 50% of individuals would be interested in a workplace savings scheme if their employer offered one. 

Nudges and encouragement texts were also found to be effective at increasing the engagement individuals have with their savings. 

Saving regularly improves wellbeing

The researchers found evidence that having a savings habit helps people move from a vicious cycle of financial problems and poor mental health, to a virtuous cycle of improved resilience and better wellbeing, no matter how small the amount saved.

It is those on the lowest incomes who are reaping the biggest benefits of putting a little aside, with 53% of savers in these groups saying they are satisfied with their life, compared with just 40% of low-income non-savers. 

Low-income regular savers also enjoy similar levels of life satisfaction to non-savers on much higher incomes, such as being more optimistic about the future, their ability to relax and sleep better at night, and generally being more satisfied with life overall. 

Commenting on the findings, Andrew Gall, Head of Savings at the Building Societies Association said:

“UK Savings Week encourages savers to set a goal – something to aim for and focus on – to help them maintain a regular savings habit.

“It is encouraging to see clear evidence that not only those saving for short-term goals, such as a luxury item or a holiday, achieve success. Those who set much bigger, longer-term life goals, such as buying a home, also reached their target.

“But we can’t rest on our laurels when there are still 14 million people in the UK with less than £100 in emergency savings*. Whilst we appreciate that some people simply won’t be in a position to save right now, these report findings show why everyone should be encouraged to save a little, if they can, when they can.

“Financial organisations must also play a part by continuing to provide the products and incentives that encourage better savings habits. There is also a role for the new Government in helping to build a nation of savers.

“Enabling and expanding workplace savings schemes, clarifying the future of the Help to Save scheme, breaking down the penalties and barriers in Lifetime ISAs, and building on the successes of the ISA regime can all help people to realise the short- and long-term benefits of a savings habit.”

Susan Allen, Chief Executive at Yorkshire Building Society added:

“The significant findings in this report show that those who save are far more likely to achieve life goals, including home ownership. This demonstrates to me that by continuing to help people to save and own their own home at Yorkshire Building Society we really are providing real help with real life.

“We’re committed to helping people realise their homeownership ambitions and will continue to find ways to innovate and support aspiring homeowners and movers through products like our £5k deposit mortgage and our many regular saving accounts which help people achieve these life goals.

“When, how, and how much people save will be different for everyone. UK Savings Week helps amplify the important role savings play – including in helping people find a place to call home. It’s proven: saving can make us all healthier, happier and as ready as we can be for whatever life brings.”

Ends

*Source: Money and Pension Service 

Press contacts:
Katie Wise, pressoffice@bsa.org.uk  Tel: 020 7520 5904

Notes to Editors:

1. UK Savings Week is an annual campaign to get people engaged in saving. It has been created through the collaboration of several building societies, credit unions and other providers, as well as consumer groups and debt charities. 
   This year's campaign will run from 9 to 15 September 2024.
2. The Help to Save scheme allows individuals who are eligible for Working Tax Credit or who are receiving Universal Credit to get a bonus of 50p for every £1 they save over four years. The scheme is due to end next year.
3. Workplace savings schemes, or payroll savings, are regular savings made directly from a worker’s pay. The employer sets up the savings scheme and deducts an amount each individual employee wishes to save directly from their wages, via payroll, into a specific savings account. 

• There are no enhanced tax benefits for workplace savings. 

• Employees can access their savings at any time. 

• Employers have no access to their workers savings and have no information about how much each individual has in their account.