4 December 2002

‘SAVING…BORROWING…IT’S ALL THE SAME TO ME!’ - BRITS REVEAL

 

·      15 million (33%) UK adults say they’re ‘savers’, but are borrowing on plastic or personal loans at the same time

·      Savings Brake goes into reverse - we now borrow more than we save!

 

As shoppers flex their plastic for what promises to be a bumper Christmas spending spree, research from IFA Promotion* reveals that more than 15 million (33%) UK adults have developed a split personality when it comes to their saving and borrowing habits.  Whilst nearly eight out of ten people (77%) say they’re ‘savers’, nearly half of these own up to borrowing beyond their mortgage debt at the same time.

 

In fact IFA Promotion’s updated Savings Brake research** reveals this lack of ‘joined-up thinking’ has reached such severe levels that as a nation, we are currently borrowing more money than we are managing to stash away (£1.09 for every £1 saved), widening the £66 billion long-term savings gap.

 

The research also shows that:

§           Over a quarter of people (27%) are currently putting money into savings whilst paying money off a loan or a credit card bill.

§           Men see the ‘link’ least, with 31% paying off non-mortgage debt whilst at the same time putting money into some form of savings vehicle (vs 23% women).

 

To help those keen to close their personal savings gap, IFA Promotion has produced its How to Get Saving! factsheet, looking at why we need to save, how much we should be putting away, and the range of ways to do so.  People can call 0800 085 3250 or visit www.unbiased.co.uk for a copy and details of local independent financial advisers who can help plan the most suitable savings strategy  for them.

David Elms, Chief Executive of IFA Promotion commented “It’s worrying how many of us exhibit a split personality when it comes to our most basic financial habits, with a third of us actively saving whilst paying off the plastic or a personal loan at the same time.  Borrowing is already canceling out 100% of all new saving; and as the Christmas spending spree inevitably becomes a borrowing bonanza, the £66 billion long-term savings gap will be wrenched open still further over the festive season.” 

 

In addition IFA Promotion’s Get Saving! report also reveals that:

§      The most popular motivator for those who have put money aside recently is to save up for specific purchases, such as Christmas presents – 35% of people save in this short-term way.

§      The UK faces an enormous long-term savings shortfall of £66 billion, which equates to an average £2,263 too little saved per head this year alone.

 

Elms concluded, “There’s little doubt that credit cards and personal loans serve a useful function, forming an integral part of many people’s financial budgeting; however it’s alarming to see how levels of non-mortgage debt have taken off over recent years, whilst the long-term savings gap has continued to widen.  It’s no use kidding ourselves that if we salt away a few pounds here and there, we can borrow like there’s no tomorrow - we are urging people to think in a more joined-up way about how much borrowing acts as a brake on closing their personal savings gap.”

 

For details of local IFAs and a copy of the How to Get Saving! factsheet, call the IFA Promotion hotline on 0800 085 3250 or visit www.unbiased.co.uk

- ends -

 

For further information, please contact:

David Elms                               or                     Liz Willder / Richard Winder

Chief Executive                                                  

IFA Promotion                                                   Lansons Communications

Tel: 020 7833 3131                                             Tel 020 7490 8828 lizw@lansons.com                

 

1.  Independent Financial Adviser Promotion

 

IFA Promotion was established in 1989 to promote the value and accessibility of independent financial advice to the public.  It represents over 10,000 firms of independent financial advisers across the UK and is sponsored by 27 leading financial institutions. In 2001, 265,000 consumers and businesses used IFA Promotion to find local independent financial advice.

 

IFA Promotion’s believes Independent financial advice should be:

 

·        Affordable.  The option to take independent financial advice should be available, by right, to all - not just the wealthiest in society.

 

·        Convenient.  IFAs should be available in the location of the consumer’s choice, wherever they live in the UK.

 

·        Transparent.  It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.

 

2.      Independent Financial Adviser Promotion’s sponsors

AMP NPI

Old Mutual Asset Managers Limited

AXA

Prudential

Barclays Global Investors Funds

Scottish Equitable Plc

Bright Grey

Scottish Life

BUPA

Scottish Mutual Assurance Plc

Canada Life

Scottish Provident

Clerical Medical Investment Group

Scottish Widows Plc

Eagle Star

Selestia

Friends Provident

Standard Life Assurance Company

GE Life

Swiss Life (UK) Plc

INVESCO Fund Managers Ltd

Skandia UK Group

Legal & General

Tunbridge Wells Equitable Friendly Society

National Savings & Investments

Winterthur Life UK Ltd

Norwich Union Life

Zurich Life Assurance Company

 

 

3. The Savings Brake, a barometer of UK saving behaviour

 

New savings

New debt

Savings Brake

1990

£bn

£bn

%

Q1

8.5

9.9

116.4 (Peak)

2000

£bn

£bn

%

Q1

14.9

7.9

53.0

Q2

16.8

10.9

64.9

Q3

17.8

6.2

34.8

Q4

19.8

6.7

33.8

2001

 

Q1

19.0

5.8

30.5

Q2

21.0

13.2

62.9

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