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With the ongoing cost-of-living crisis, there are multiple reasons why many households across the UK are struggling financially. Energy costs are high and inflation has been affecting the cost of food and other essentials. Credit card borrowing is also up, according to the latest Bank of England figures.
However, NerdWallet’s latest study on the country’s savings habits paints a more positive picture. In fact, the UK emerged as a country where people have strong savings goals, and are taking action to increase their savings. In order to understand what it is like to save money in the UK in 2024, we surveyed 2000 UK adults about how they felt and behaved when it comes to putting money aside.
Key findings
- The most popular savings goal is retirement, with 51% listing it as one of their top three savings goals.
- 28% of those surveyed said they were not confident they would ever meet their main savings goal – but 38% said they thought they would in two years or less.
- On average, people estimate that they would be able to maintain their current lifestyle for just over four months if they were to lose their job.
- The most popular savings tactic is cutting down spending on non-essentials in order to put the money we would have spent into savings, with 42% of us in the UK doing this.
- 6% of us are saving to start or grow our own business, but the percentage of people with this savings goal in London is far higher, at 17%.
Savings goals
NerdWallet’s survey asked respondents to select up to three of their top savings goals, and the clear front runner was ‘retirement’, which 51% of respondents selected. This was closely followed by ‘build up an emergency fund’ at 41%, which financial advisers highly recommend. In fact, having three to six months of savings to fall back on can protect you from falling into debt if something unexpected happens. What’s more, almost 90% of those surveyed said they had a savings goal which is good news, as having something to work towards can be great motivation.
| Which, if any, of the following are the most important saving goals to you? [Select up to three] | (%) |
|---|---|
| My own retirement | 51% |
| Build up an Emergency Fund (3-6 months essential living expenses) | 41% |
| Holidays and travel | 40% |
| Supporting my children | 27% |
| Deposit for a new or bigger house | 12% |
| Planning for children | 8% |
| Supporting older family members | 7% |
| Starting or growing my own business | 6% |
| My own wedding | 4% |
| Other | 2% |
| Not sure / nothing in particular | 11% |
Emergency fund
An emergency fund can give you peace of mind.
A surprisingly high percentage of people, at 22% of those surveyed, said they would be able to maintain their current lifestyle for more than six months if they lost their job and were living off savings.
The next highest percentage group of savers was those who thought they had saved enough to maintain their lifestyle for three months, at 10% of those surveyed.
Over a quarter( 28%) of respondents said they didn’t have a job, but it’s not certain what proportion of these people are retired, full-time homemakers, carers, students, or unemployed.
Overall, men think they could last for longer on their savings than women – on average 4.52 months to women’s 3.94. The average across all answers was 4.21 months.
Worryingly, 10% of 55- to 64-year-olds feel they could only maintain their current lifestyle for less than three months if they lost their job.
How long to reach your goal?
NerdWallet UK asked the respondents to tell us how long they thought it would take them to reach their savings goal.
While 28% unfortunately didn’t think they would ever reach it, others felt quite confident about their savings.
There were 14% who said they thought they would reach it in five to 10 years, and the next highest percentage was those who thought it would take them only one to two years, at 12% of those surveyed. One in 10 thought reaching their goal would take three to four years.
| How long do you estimate it will take you to save up for your most important financial goal? | (%) |
|---|---|
| Less than 3 months | 7% |
| 3-6 months | 5% |
| 7-9 months | 5% |
| 10- months to 1 year | 9% |
| 1-2 years | 12% |
| 3-4 years | 10% |
| 5-10 years | 14% |
| 11-15 years | 3% |
| 16-20 years | 2% |
| Longer than 20 years | 4% |
| N/A – I’m not confident I’ll ever achieve my goal | 28% |
Two in five (40%) of those aged 65 and up think they will achieve their savings goal in a year or less. Those aged between 24 and 35 are the second most confident on this, with 36% giving an answer of a year or less.
However, 65-year-olds and over are the most likely to say they are not confident they will reach their savings goal overall, at 38%. This is likely because a sizeable number of this age bracket will be approaching retirement age and will lose their current source of income from work. It is concerning to hear that some of these older people will no doubt be worrying about affording their retirement, or other goals which they will now have less time to save for.
Savings tactics
We asked our respondents to tell us what savings tactics they had employed in the past year. The most popular savings tactic was cutting down spending on non-essentials in order to put the money they would have spent into savings, with 42% of respondents selecting this option.
The second most popular tactic was using discounts, coupons and loyalty schemes, at 37%, followed by switching to a new savings account with a higher interest rate at 36%.
| What measures, if any, have you taken in the last year to increase your savings? [Select all that apply] | (%) |
|---|---|
| Cut down spending on non-essentials in order to put money in savings | 42% |
| Used discounts, coupons and loyalty schemes to reduce outgoings in order to save more each month | 37% |
| Switched to a new savings account with a higher interest rate | 36% |
| Opened a savings account | 22% |
| Started using a banking app to round up my spending to the nearest pound, and transfer the difference to my savings account | 12% |
| Other – please specify | 1% |
| N/A- I haven’t taken any particular measures in the last year | 28% |
Regionally, the East of England was the most likely to not take any savings measures in the last year (37%). This area was also the least likely to cut down on non-essentials to put money in savings (26%). Could this be an indication that respondents in this area were feeling financially more comfortable? We would always recommend taking measures to save more if you can, particularly to contribute to an emergency fund.
» MORE: 9 habits of successful savers
People who earn more money are statistically more likely to use round ups to increase their savings – 20% of those in the £40,000 to £60,000 salary bracket do this, compared to 13% of those earning £20,000 to £40,000 a year. This tactic uses a feature offered by high street as well as digital banks, which rounds up your card payments to the nearest pound, sending the change in pence automatically to your savings account. It could be the case that this is a method that people are more likely to use if they are feeling financially comfortable, and able to spare the change.
Britain’s entrepreneurs, founders and SME leaders
While only 6% in our survey said they are saving to start or grow their own business, when you delve into the data you can see this doesn’t apply across the board.
London was the region with the highest percentage of people saving for this goal, at 17% – that’s over 10% higher than the national average. People based in Wales are also more likely to save for this reason than other regions, at 11%.
In terms of individual cities, Brighton and Hove also had a high proportion of individuals saving to start or grow a business, at 19%.
One interesting result in this area is that there is very little difference between the number of men and women who are saving for this goal. With 5% of women compared to 7% of men, this similarity is good news for gender equality in the business world – and good news for the economy. The Alison Rose Review of Female Entrepreneurship in 2019 found that if women started and scaled businesses at the same rate as men, it would boost the economy by £250 billion.
Those in the 18 to 24, 25 to 34 and 35 to 44 age groups are the most likely to save to start or grow their business, at 22%, 17% and 9% respectively.
Amy’s Tips: Commentary from NerdWallet UK’s spokesperson
“NerdWallet’s research suggests that many UK adults are spending more mindfully and reducing non-essential outgoing to prioritise savings. Making use of digital technology, such as banking apps that enable automatic round-ups, is just one example of how saving can be incorporated into our daily habits.
“More than a third (36%) of consumers are optimistic that they will meet their main savings goal in the next one to 10 years, and this percentage could grow if we all continue to have open conversations about money and actively seek sources of free, trustworthy, advice and support.
“It’s reassuring to see that, on average, UK adults have money set aside to last them around four months if they were forced to live off their savings. The minimum amount of savings recommended for your emergency fund is three to six months of essential outgoings, and over a fifth (22%) of adults surveyed were reaching the top end of this savings goal.
”However, it’s concerning that 10% of UK adults aged 55 to 64 feel they could maintain their current lifestyle for less than three months if they lost their job. This could suggest a hangover from the toxic combination of Covid, the cost-of-living crisis, high energy prices and high inflation. UK households forced to drain their savings may have insufficient funds for any future financial shocks.”
Methodology
The survey, conducted online by OnePoll on behalf of NerdWallet UK, asked 2,000 UK adults to respond to a series of questions about their attitudes and behaviour regarding saving. The survey also collected data on their age, region, gender, nearest city, and income. All data was collected in February 2024.
Image source: Getty Images
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