An extra 340,000 households have no savings to their name since last year, rising to 9.79 million in 2017, according to the latest Money Statistics.
April’s Money Statistics reveal that the amount of households in the UK with no cash savings has increased by 3.5% in 2017. This means that the overall amount has risen to almost 10 million, with a further 3.26 million households with savings under £1,500.
The rise in households with no savings in the UK last year indicates the reliance on everyday credit in the UK. Without some form of savings buffer, these households could be falling into problem debt when having to pay for unexpected costs such as boiler breakdowns, car MOTs or loss of income. This is especially concerning as fewer people are developing patterns of good planning and savings, meaning they are more likely to be unaware of their spending patterns, and overall less in control of their money.
The report also reveals that 71% of households (19.3 million) have less than £10,000 in savings – an increase of over 800,000 people. This means that for the majority of UK households, big purchase items such as a car or house deposit will likely require financial support either through family and friends or through creditors.
Without savings put away, many people face increasing debt burdens as they rely on credit to cover emergency costs such as boiler breakdowns and car MOTs. This fact correlates with the ever-increasing consumer credit debts in the UK, which increased by £1.9bn in February 2018 according to the Money Statistics. Whilst there are concerted efforts from the Bank of England to raise interest rates, and HMRC with the likes of Help to Save, it is a concern that such a large amount of UK households have no money to fall back on when an unexpected cost occurs.
Michelle Highman, Chief Executive of The Money Charity says:
“Saving is a vital habit for everyone to develop as it forms patterns of planning and budgeting. These are key pillars to understanding and managing money effectively. Without such an emphasis on saving, we worry many people will rely on high-cost credit products that do not suit their financial situation. Therefore, we are relieved to see the marked effort by the Bank of England and HMRC to encourage saving amongst the almost 10 million households without any savings.”
Other key points from the April Money Statistics:
- Unemployment amongst 18-24 year olds fell by 2.9% between December and February – reaching its lowest level since 2004.
- The average house price in March reached £227,871 according to Halifax – the highest price since records began.
- The amount of debt owed per adult in the UK reached £1,169.92 in February.
Get the full picture and many more fascinating facts about money in the UK in our monthly Money Statistics.