42% have no money left to save

The number of people saving regularly declined in August, with 42% of people now not saving any money at all according to the Nationwide UK (Ireland)/ESRI Savings Index.

Just 32% of people are saving regularly in August compared with 41% for the same time last year. The number of people with no money left over to save at the end of each month has increased to 42%, up from 39% in July and an increase of 14% in the 12 months to August 2011.

Managing director of Nationwide UK (Ireland), Brendan Synnott, said there has been a decline of regular savers in 2012.

“The main underlying trend this year has been a decline in the incidence of regular saving,” he said. “Fewer people are now saving on a regular basis, while at the same time more people are not saving at all and the result is downward movement in the index.”

Mr Synnott said the decline in the number of savers in advance of what is expected to be a severe budget was a worrying development that led him to believe that the decline in savers will continue.

“Data from the ESRI echoes this pattern, with savings as a percentage of disposable income dropping to 5% in 2011 from 11% in 2009,” he said.

“In addition, there is no evidence as yet of increased consumer spending and as we approach the next budget, it is likely that these trends will continue.”

Despite the decline of saving activity, consumers remain positive about their ability to save in the future. Some 79% expect to maintain their current level of saving over the next six months, an increase from 66% in Aug 2011, while 12% expect to be able to save more over the next six months, an increase of four percentage points from last year.

Mortgages remain a serious concern for consumers, with 51% stating they would use surplus cash to pay off debts, including their mortgage. Only 8% of people said they would spend surplus money, down from 10% last month and 9% in Aug 2011.

When split into age categories, it is the under-50s who are least likely to spend their spare cash. Only 3% of the under-50 age bracket would spend spare cash, down from 7% in Aug 2011. More than four times as many of the over-50 age group, 14%, would spend spare cash.