LONDON, September 30, 2013 /PRNewswire/ --
Instant gratification culture is making our savings pot unhealthy, finds Zopa
Britain's unhealthy attitude towards personal savings could steer us towards an early retirement crisis. Research from the UK's biggest peer-to-peer (P2P) lender, Zopa, looked at the UK's saving habits and has found that Brits are in need of a critical financial health check. Survey findings from YouGov show that whilst Brits think they have a healthy attitude towards money, when it comes to saving for the future, over a third (36%) prioritises their next holiday rather than the long term.
The survey of over 2,000 UK adults shows that saving for retirement is not considered a top priority. In fact, Brits are still longing for sandy shores and far-off places, with holidays topping the list of what we are saving for. And that's if you save at all, with 1 in 5 (19%) admitting to having no savings product whatsoever.
Britain's Top Ten Savings Goals:
- Holiday - 36%
- Rainy day - 32%
- Emergency fund - 31%
- Retirement - 26%
- Children - 14%
- Buying a property - 13%
- New car - 12%
- Future repairs - 11%
- Grandchildren - 9 %
- Down payment for a house - 8 %
Zopa found that the majority of Brits still hold their savings in traditional savings accounts (59%) despite rock bottom interest rates being on average 0.66% (according to MoneyFacts.co.uk). To make matters worse, the current rate of inflation stands at 2.8%, meaning savings are wasting away and losing the pounds they have saved. As a final blow to savers' chances of a healthy financial future, many end up losing out when banks' teaser rates expire and leave them unwittingly on the worst rates - a practice the FCA has pledged to investigate.
Whilst 8 out of 10 of us say that we have little or no trust in our savings provider, only two in five (43%) of us actually review our savings once a year or less often, and over half (51%) don't even know the current rate of interest on our savings accounts.
Independent financial analyst, Louise Cooper CFA says, "Britons need to bulk up their savings to get them working as hard as they do, even more so when money is tight. To ensure your savings are fighting fit, it's important to know where to cut the fat when looking at savings options. Peer-to-peer lending offers a real alternative to banks with higher rates for savers to help your money grow. If you don't like bankers, why give them your savings?"
To help savers with their financial health check, Zopa has created a P2P savings calculator, to work out exactly what you would earn in interest through P2P lending, compared to existing savings rates to help get your finances in better shape.
Worryingly, when asked what Brits are saving for, retirement came in a lowly fourth and saving for a house deposit came last on the list. Whilst over two thirds (69%) of 18-54 year olds believe that they are good with money, only one in five (21%) are actively saving for their retirement. This is despite 81 per cent admitting that they need to save in order to have a comfortable retirement and avoid a retirement crisis.
Giles Andrews, Zopa CEO and Co-Founder said, "No matter what you are saving for, or how much you are saving, you want to get the best return on your money. Alternative ways to save, like Zopa, offer better rates to consumers by cutting out the banks. Our customers avoid the damagingly low interest rates at the banks, so their finances are in a much better shape than most - earning returns with Zopa well above inflation. The findings show that whilst we may think we are good with money, most of us need to do an immediate financial health check to ensure we are squeezing the most from our savings. Our advice would be to shop around, take a look at alternative options like Zopa and be smart with your money to ensure you get the best deal."
Zopa is the UK's leading peer-to-peer lending company - bypassing banks and their high charges to put more back into the pockets of the UK's savers and borrowers. Zopa matches smart borrowers looking for lower-rate loans with savers looking for higher interest. Since Zopa was founded in 2005, it has arranged more than £370 million in peer-to-peer loans and has been voted 'Most Trusted Personal Loan Provider' in the Moneywise Customer Service Awards for the past four years. Zopa has over 42,000 active savers lending between £10 and £1 million and has a lower default rate on loans than the banks.
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,111 adults. Fieldwork was undertaken between 17th-19th June 2013. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
Helena Reid/Hannah Warmington, Brands2Life