More 18-24 year olds saving than any other generation

Aldermore’s first annual savings index has found that young adults are more likely to be saving regularly than any other generation in the UK.

The bank found that while many 18-24 year olds will be focused on getting their education and establishing their careers, they are still managing to save 10% of their annual income. Although they may not be saving the largest amount (an average of £1,160 annually), almost three quarters (74%) of 18-24 year olds are saving, compared to the national average of fewer than seven in ten (69%).

When it comes to the UK’s savings habits, the nation is putting away 8% of pre-tax income on an annual basis. The report shows that although the savings message appears to be resonating, on average the nation is only saving £1,832 annually, equating to £153 a month. This means long term savings goals such as buying a home could take a significant amount of time to reach.

From a regional perspective, it’s no surprise that London saves more than any other region (on average £2,990 annually) given earnings are higher than the rest of the U.K (average salary of £30,734), however it appears that a higher income doesn’t lead to people saving a larger proportion of their earnings. Savers in Northern Ireland and Wales are managing to save the same ratio as the rest of the UK. In Wales, people earn on average over three-fifths (63%) less than Londoners (on average £18,865 annually) and yet are still managing to save 8% of their income, £1,429 a year.

Overall, those who earn more actually save less of their annual salary towards their personal savings than those on a lower income. The research shows that those earning over £40k put away 10% (£5,785) of their income, whilst those earning up to £10,000 a year are managing to put aside 15% annually (£759). However, those on a higher income (over £40k a year) are more likely to save regularly, with 36% saving on a monthly basis (compared to the national average of 29%).

The research found that 31% are still not saving at all, with 69% of non-savers stating that they simply do not have enough left over at the end of the month. In general, the ongoing low interest rate environment doesn’t appear to have impacted savers, with 13% saying there’s no point saving anymore because of low interest rates. 9% of non-savers would rather spend the money they earn on living life, than saving for the future. Those in the North East are less likely to save than any other region, with 34% not saving anything at all.

Even those who are saving claim they would like to put more away, with 56% of savers feeling they are not saving enough on a monthly basis. This rises to 60% of women and 74% of 18-24 year olds. 44% of 55-64 year olds believe they should save more.

Simon Healy, managing director – savings at Aldermore, said: “Although almost a third of the population (31%) currently do not save anything at all, our new analysis shows that for the majority, the savings message is resonating, despite the low rate environment over recent years. It is encouraging to see that people on low incomes and the younger generation are actually some of the best at saving, the earlier people start savings the quicker and better chance they have of reaching their savings goals in later life.

“However, it’s clear that this can be hard with many people feeling that they are not saving enough particularly at a time when wages are not increasing in line with the cost of living. We hope that we can encourage people to make even a small change in their saving and spending habits, which can go some way to provide protection for the future.

“We would always advise savers to shop around to find the best savings account for their needs – even in a low interest rate environment.”