This is less than the 27.4% peak during the coronavirus pandemic in 2020 when there was less opportunity to splash the cash at retailers and on the high street.
Following a huge dip to 6.6% in 2022 there was a “steady increase”, according to the Office for National Statistics in how much the UK could set aside financially.
The data on saving levels of families in the UK spanned from 2020 to 2024, in which time the ONS noted the estimated savings pot accumulated by households was between £143bn and £338bn.
During that time, families had to handle the cost-of-living crisis as energy bills and the price of a weekly food shop skyrocketed during that four-year period.
However, with fourteen consecutive base rate hikes from the Bank of England, savers had an opportunity to make the most of higher interest rates from providers.
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There is some further reason for an element of optimism as inflation has also settled down to the Bank of England’s target of 2%, after it hit the lofty heights of 11.1% in October 2022.
‘Stark reminder of the perils of not having adequate savings’
Myron Jobson, senior personal finance analyst, at Interactive Investor, pointed out the higher interest rates increasing savers’ returns as “undoubtedly a significant factor behind the reprieve in household savings”.
Jobson said: “It might also be a case of people learning from financial hardships experienced in recent history. The harsh reality of income loss and economic instability during the Covid-19 pandemic served as a stark reminder of the perils of lacking adequate savings. The ensuing cost-of-living crisis has underpinned the need for financial resilience in an unpredictable world.
“However, holding onto extra savings will be a challenge for many. Higher prices still weigh heavily on many households – not least those who haven’t experienced an uptick in income.
“Homeowners coming off fixed-rate deals are heading for a sharp increase in monthly mortgage payments, which, in many cases, will force them to allocate a larger portion of their earnings toward housing costs, leaving less room for savings and investments.”
Jobson added: “As ever, it remains important to maintain a rainy-day fund. Holding three to six months’ living expenses in cash is a good rule of thumb.”
Following the ONS study, Sarah Pennells, consumer finance specialist at Royal London, says the increasing savings levels are “welcome news… but our latest financial resilience research shows it’s a very mixed picture.”
Pennells said: “The average amount that people told us they had in cash savings was £15,549, but there were wide variations within that figure. For example, those aged 35-49 had only £9,452; the lowest of all age groups, while renters had just £6,543 in savings.”
“However, a significant proportion of the population have little or nothing to fall back on if they have an unexpected expense. Our research shows that one in five people have less than £100 in savings, with 15% of those saying they have no savings at all.
“This is a very worrying statistic, as it leaves them vulnerable to life shocks which might lead them to taking on expensive debt to cover unexpected payments like repair bills.”
