The Covid-19 Savings Gap
The results are in!
Back in 2013, we began our regular surveys to understand the saving habits of the nation. Since then, we have polled more than 46,000 people and confirmed our suspicions that there is a huge amount of people in the country who do not save enough for later life.
This shortfall, the difference between what we say we need for a comfortable retirement and how much we’re actually on track for, is called the Savings Gap. You can read about 2019’s results in our 2019 annual report.
We have been very interested in finding out how the last three months have affected savings in the UK. Our full report with all the COVID-relevant findings will be published later in the year, however, below are our initial understanding from the survey.The key finding uncovered that in a survey of 2,000 people – taken during the last three months – over 42% say that they have taken on a new form of debt. This included traditional loans, credit cards, store cards and payday loans. The report shows that men over 55 have taken on the highest percentage of additional debt.
In terms of region, people based in Northern Ireland are most affected, of those surveyed 54% say that they have taken on more debt in the last three months.
When asked the question “What have you had to do in the last 3 months just to get by?”; nearly 70% have used their personal savings and needed more frequent use of credit cards to pay their day to day bills. It also reveals that 13% of people said that they have needed to borrow money from friends during this time.
During this period, only 24% of those surveyed say that they have managed to contribute towards any general savings (not including pensions). This has led to nearly 70% of those who took part in the research saying that they were either very or quite concerned about their personal finances for the remainder of 2020.
An interesting aspect of the report is that it has highlighted a divide between those who can save and those who cannot. 41% of people say that they have saved less, and 32% have managed to save more over that last three months. The remainder of the survey showed that 20% say that their savings have stayed the same, with a worrying 7% admitting that they do not have any savings at all.
All the above has made people start to re-think their relationship with money. It showed that 70% of people say that Covid-19 will make them a lot more careful with their personal finances from now on.
If you want to know how you can reduce your savings gap, please read our blog ‘How To Close Your Savings Gap’.
For more on the Savings Gap, subscribe to the True Potential YouTube channel. The Do More With Your Money podcast panel recently discussed the latest Savings Gap findings in #22 How Has Lockdown Changed The UK Savings Gap? You can watch the episode here.
With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. Past performance is not a guide to future performance. Tax rules can change at any time. This blog is not personal financial advice.