Britons saving more, but still not enough

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Britons are saving one fifth more than they were a decade ago by putting an average of £98 a month aside for a rainy day.

Despite sluggish wage growth and the squeeze on household finances, research by Treasury-backed savings provider NS&I found people are saving the equivalent of 7.76 per cent of their incomes every month. This compares with an average of £82 a month, or 6.70 per cent of their incomes, 10 years ago.

Women have also been narrowing the gap to save almost as much as men do over the period as a percentage of their income. Women now put £81 a month away typically, equating to around 7.76 per cent of their income, while men save £115 a month on average, or around 7.81 per cent of their wages.

But the gender divide looks set to continue in the coming months, with 16 per cent of women saying they are more likely to save money in the next quarter, compared with 18 per cent of men.

Savings levels peaked at 8.31 per cent of average incomes in spring 2011 and the amount put away each month still has yet to exceed a high of £104 recorded in winter 2012.

Patrick Connolly, head of communications at financial advisers Chase de Vere, said the financial crisis has helped educate people on the importance of saving money but Britons were still not doing enough.

“Too many people still don’t recognise the need for long-term savings while others are simply unable to save more as their household budgets have been squeezed,” he warned.

With 74 per cent now sorting out their finances online compared with 29 per cent a decade ago, only half of those surveyed said they were visiting branches in person as more turn to smartphones and tablets to save time.

But despite increasing access to banking services, 28 per cent said they feel more worried about saving money than they did 10 years ago, and only 14 per cent were more confident.

Figures released yesterday show that pressure of household living costs is continuing to ease back, which could help more people to boost their savings.

The Consumer Prices Index (CPI) rate of inflation dipped to 1.9 per cent in January and experts predict that inflation will remain under a target of 2 per cent throughout 2014, fuelling hopes that wage growth will finally overtake rises in the cost of living.

But with the Bank of England base rate having remained at its historic 0.5 per cent low for more than five years, savers’ struggle to find real returns on their cash pots continues.