Savers have the best of intentions when setting targets for putting money away – but one in five falls short of their goals.
Most blame the rising cost of living for missing out on saving, according to new research by the Post Office.
The average savings target is £1,500 a year, but most people only succeed in adding £500 a year to their cash stash, says the report.
The study also found that almost one in four men rely on a bonus to meet their savings target, compared to 10% of women.
Many savers also aim for unrealistic targets – for instance, says the research, although so many fail to meet their previous objectives, around 44% set a more ambitious target the following year and generally fall short again.
Changing lifestyles
The Post Office reckons the amount most households manage to save will fall from an average £3,780 last year to around £3,600 this year.
More than half blamed inflation for missing their savings target, while just over a quarter of savers changed their focus from putting money away to clearing debts.
“The economy is undoubtedly improving, but many savers are just not savvy,” said Henk Van Hulle, head of savings and investments for the Post Office.
“Families need to worry less about targets and more about changing their lifestyles and spending habits if they want to have a meaningful amount in savings and investments.”
Van Hulle explained few households bother to review their spending to see where they could make cuts.
How to save money
For instance, taking a flask to work rather than buying coffee could save many people £20 a week, which adds up to £1,000 a year – and fills the gap between most people’s saving targets and the amount they fall short.
Other simple savings could be eating out less or drinking less when socialising.
Van Hulle also suggests taking advantage of tax-free savings like ISAs rather than putting money in taxed savings accounts can also make a difference.
Tax for a basic rate taxpayer on £1,000 a year in savings is £200, while the same money in an ISA is untaxed.
“Someone earning £50,000 a year will have more disposable income than lower earners and are more likely to hit their saving targets,” he said. “Many people in London earn more and hit their savings goals than those in lower income areas like the North West, where only 15% of people hit their targets.”
