Cost of living hinders saving

EIGHT out of 10 working people save about €299 a month but most still borrow rather than save for a large purchase, a study shows.

The rising cost of living is beginning to bite, however, with nine out of 10 saying it has impacted on their ability to save. One in every five regular savers have cut back on socialising to increase the amount that they save each month and working adults are spending more on savings than on clothes, socialising or holidays.

The survey conducted by Millward Brown IMS for the EBS Building Society found that a third are saving for a rainy day and one in five are saving for their children’s education. More than a quarter are saving for nothing in particular.

And, interestingly, 13% of people in a relationship have savings that their partner does not know about. The figure is slightly higher among women than men.

Security is the main motivation but, despite thematuring of Special Savings Incentive Accounts (SSIAs) only two-thirds of people surveyed felt well informed on the issue of saving. Only a third of regular savers know their interest rate.

Six out of 10 regular savers believe they should save more money each month and a little more than half believe they are financially secure for the future. Only one in five said they preferred not to think about savings.

Educating people about a pension remains a challenge with half feeling uninformed about pensions and only a third could say how much the State pension actually is. A mere 17% felt they could survive adequately on a pension, while 60% of those who do not have a pension say they are likely to take one out.

EBS head of retail business Dara Deering said the number of people saving was higher than anticipated and was likely to be related to habits created through the establishment of the SSIA scheme.