Millennials get the savings habit
18-24-year-olds save more of their pre-tax income than any other group, at 10% of their pre-tax income, according to the new annual savings index from Aldermore Bank. Three quarters (74%) of this age group save regularly, compared to 69% nationally. Over half (56%) of savers in the UK do not feel they’re saving enough and almost a third (31%) of people are not saving at all.
There are also regional differences: Londoners may be the highest earners, but they are only saving a slightly higher ratio of their income compared to the lowest earners (Wales).
On average, Brits are putting away around 8% of their pre-tax income, equivalent to £1,832 annually, or £153 a month. Most are not deterred by low interest rates, with only one in ten saying it puts them off saving. One in ten (9%) non-savers would rather spend the money they earn on living life. Those in the North East are less likely to save than any other region.
The research shows that those earning over £40k put away 10% (£5,785) of their income, while those earning up to £10,000 a year are managing to put aside 15% annually (£759). That said, those on a higher income (over £40k a year) are more likely to save regularly, with over a third (36%) saving on a monthly basis (compared to the national average of 29%).
The findings echo worldwide surveys that show millennials are among the most diligent savers. A recent report from Ascensus in the US found millennials are beginning to outpace older generations in terms of saving. Young employees are proactively participating in their employer’s retirement plans early in their career.
Simon Healy, managing director – savings, at Aldermore, said: “Our new analysis shows that for the majority, the savings message is resonating, despite the low rate environment over recent years. It is encouraging to see that people on low incomes and the younger generation are actually some of the best at saving, the earlier people start savings the quicker and better chance they have of reaching their savings goals in later life.”