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“ Like squirrels who put aside nuts for the winter , people wish to save in order to protect themselves in case times turn bad "
@ BathBuildingSoc
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This lead to unsustainable growth in the levels of unsecured personal debt and a national savings ratio that was amongst the lowest of the industrialised countries . Along comes Covid-19 and things have changed slightly . Despite many people having suffered severe hardship as a result of the economic fallout from the virus , statistics show that the majority of Britons who have been able to continue working have actually managed to save during the crisis . This is not surprising given the fact that working from home has saved on work related costs such as travel , lunches etc plus there has also been very little opportunity for anyone to spend any money during lockdown . The pubs and restaurants have been shut , holidays have not happened and shops have been closed . The big question is whether saving is back in vogue or whether we will all return to spending like sailors once better times return . There are early indications that more people are determined to try and keep their finances in better shape . This has got to be good news ! |
Clearly saving also takes place to fund important purchases such as houses , cars , holidays , family weddings etc but the fundamental driver of saving is to protect against rainy days . Like squirrels who put aside nuts for the winter , people wish to save in order to protect themselves in case times turn bad .
With the Bank of England base rate being at a record low of 0.1 %, and even threatening to go into negative territory , the returns available to savers on monies that they hold in deposit accounts are struggling to keep pace with inflation ; never mind provide a real rate of return . So why should people bother to save in cash if interest rates are so low and when other ‘ exciting ’ asset classes potentially provide higher returns ? Well cash can pay for the weekly household bills whereas capital tied up in property or stocks and shares is of little use in the short term . It ’ s not much use being asset rich and cash poor when you are made redundant , go on short time or are furloughed . Saving into cash deposits is also low
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risk whereas the values of stocks and shares and property do fluctuate .
Good financial advisers will say that cash should be part of a mixed portfolio of savings and investments and I completely agree with this . Getting some cash savings together should be the first financial priority for all of us . Part of Bath Building Society ’ s social purpose is to promote saving as a means of improving the lives and financial security of our Members . If you think that we can help you with your saving plans , why not give us a call on 01225 423271 .
Please take care .
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