One in five Brits have no plans to put money aside in savings or investments this year, the latest Savings and Investments Report from Scottish Widows has revealed.
The report reveals that the nation's savings behaviour is being significantly affected by the current economic conditions, as more than 85 per cent say they have no money to save.
This figure has increased from 50 per cent last year, reflecting the change that the recession is imposing on household budgets. In fact, 75 per cent of those who have no money to save blame the daily cost of living.
Meanwhile, the burden of debt
has increased as banks and building societies attempt to claw back any money they are owed, which explains why 42 per cent of people unable to save cite debt as a barrier.
Commenting, Anne Young, expert at Scottish Widows savings accounts
, said: "The rise in the number of people saying they have no money to save is alarming. It has become more of a priority for people to reduce their current debts and simply get by on a day to day basis rather than saving for their futures.
"However, while paying off debts should still be a priority, in climates like these, it is important to save even a small amount now to get into a savings habit and build up some capital," she added.
One potential solution to the savings drought brought up by the report is tax relief on savings, following the revelation that half of all respondents said they would be encouraged to save or begin to save if there were tax relief on all of their savings.
Lack of understanding is another issue that arose, as 13 per cent said they have difficulty understanding how to go about saving and investing, Anne Young added:
"There is a need to encourage and educate people to put money aside for the future, even when they think they can't afford it, or don't understand how to do it."
Speaking of the latest ISA
limit increase announcement which will see over 50s able to invest £10,200 from October 6 (available two all next tax year), she said:
"This is a positive encouragement to savers and will go some way to help those who are struggling to get investment returns in the current environment. But as our research has shown, people need to better understand these savings vehicles, and particularly the potential tax benefits.
"And although the current economic and financial climate has raised the profile of the need to prepare adequately for the future, the Government and the industry must grasp the opportunity to inform and educate people as to the most appropriate way to save and invest," she concluded.Compare savings accounts and find out more about investment products.
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