Consumers saving more but spend less

CONSUMERS are saving more but spending less, with many stashing money away as a precautionary measure.

There was an increase in people’s preference to save last month with figures showing 38% of consumers wanted to put away any spare cash they had, up from 29% last year. Consumer’s preference to spend excess cash dropped to 9% from 13%.

The Nationwide/ESRI Savings Index is now at its highest level since it launched in January last year and found that 44% of people are saving for unexpected expenses. Education and holidays are the next most popular reasons for saving at 12% and saving in case income falls is next at 10%.

Of those consumers who are able to save, almost a third put away between €51 and €100 a month.

Paying down debt is still the most popular use for spare cash with 50% preferring this option last month; however, this has decreased from 54% in April 2010.

The index increased by 25 points in May as the attitude of people under 50 became more positive towards saving. The index pointed out that economic concerns are encouraging a more positive attitude towards saving among the under-50s and this is one of the key drivers of the increase.

The percentage of under-50s saving regularly rose to 40% in May from 33% in April, while those saving regularly in the over-50s’ category rose 3 percentage points.

The proportion of people who think that now is a good time to save increased by 7 percentage points to 35% in May. This increase was also most apparent amongst the under-50s with a 10-percentage point rise since April.

Managing director of Nationwide UK (Ireland), Brendan Synnott said: “A greater emphasis is now being placed on saving for unexpected expenses and discretionary spending is being postponed.”

More than two thirds of people think they will be saving the same amount in six months time, and just 9% expect to be saving more in the future than at present, while 22% think they will be saving less.

The savings index is constructed from monthly research on Irish consumers’ attitudes towards savings.