How can banks and the government help you save more?

CKhalvashi

IronWolf wrote: »

Two things banks can do. First is increase interest rates on savings accounts, but I guess they wont do that.

Second is to make it harder to get credit, then instead of buying things on credit and paying off later people will get used to saving up for things instead.

The difficulty is that these two probably won't go together.

You either need availability of credit, or low savings rates. How is a bank expected to make a profit without interest coming in?!

But I also think its about someones mindset, and this comes down to education and upbringing. My parents always save money, never get into debt and that is my mindset too. My gf on the otherhand has parents that spend all their money and save nothing. Its no coincidence she acts the same way.

I've acted completely differently to my parents in respect to money.

Having struggled for several years, I'm now a lot more careful when it comes to outgoings, however.

CK

leoncub

Dear sir/madam,

1) "Why do British people save less than residents from than many other countries?"


Because f-e-c-k-less and irresponsible people who borrow more than they can afford are bailed out, encouraged and supported by the government, the banks and society in order to boost growth, whilst savers are penalised and pick up the bill for it with abysmal interest rates. This creates a borrowing culture of "buy now, pay later" where people are tempted to live beyond their means.

2) "What more could banks do to encourage their customers to save?"


For a start, paying interest on savings above the rate of RPI inflation (after tax) in *easy access* (no penalties or limits for withdrawals) accounts.

3) "Should ministers consider ending taxation on all savings products?"


No. The Exchequer will surely miss the revenue and merely pass on the cost to the taxpayer elsewhere. At least this form of taxation is reasonably progressive and fair. Although, if a new flat lower rate for everyone (say 10%) were introduced, this might encourage more savers and thus make up the shortfall in tax revenue from the previous higher rates.

4) "The BBA has called for the creation of new work-based savings products that workers could transfer to different employers. Would you support this and if so why?"


No. It seems unnecessarily complicated and would feel, personally, like having less control over your money than in a personal account, e.g. limits of withdrawals, or employers being able to "raid" savings accounts to raise capital on the quiet.

5) "What other policies by governments and regulators could encourage more people to save?"


* Introduce more stringent affordability checks on borrowers and reduce the borrowing culture in this country. "If you can't afford it, you can't have it".


* Pay fair interest rates on savings accounts that have no restrictions and penalties on withdrawals.


Yours faithfully

ChopperST

The key is better financial education at school level. The banks should be involved here also.

Those that mention they want instant access cash accounts that beat inflation - its never going to happen and if you look at the historical data it very rarely has for long periods of time. Investing is a much better tool to crack that particular nut and long term evidence shows that it is consistently the right vehicle to do so.

Children should be taught the benefits and (risks) of saving and investing for their future, at say GCSE level so they understand the effects of inflation, compound interest (both positive and negative) over time. Other financial products should also be discussed so our young people understand the financial system and the wheels at play.

They would then be most more adept at choosing appropriate financial products aged 18 rather than learning by doing and being stung with high APR's for credit cards and loans as soon as their birthday hits.

Seabee42

It is sad to even ask the question in such a debt rewarding culture.

If you do save and something bad happens you have your savings to fall back on, if you do not save you get bailed by the government.

Debt interest can be offset for tax in business, BTL etc.

If you cannot pay your debts so what? Really what bad happens?

The Far east saves more because they have to rely on themselves and not a welfare culture state pension etc.

BillJones

Seabee42 wrote: »

It is sad to even ask the question in such a debt rewarding culture.

If you do save and something bad happens you have your savings to fall back on, if you do not save you get bailed by the government.

One thing that the Left often seem to misunderstand about the right, in terms of the economics that we tend to favour, is that it's exactly these sort of knock-on effects that the right are thinking of when they call for lower benefits spending, less state support, etc.

We tend to want a system where there is a safety net for those who really need it, but not a feather-bed, as it is corrosive to society as a whole when people start to be able to make the rational decision not to save, or to work, or to study, and so on.

People are rational agents, they respond to incentives, and can be nudged into different activities. Telling people that they can have a great life now, blow everything, and still end up next to their frugal neighbour in the same care home, is not going to encourage prudence.

Mazzie

leoncub wrote: »

Dear sir/madam,

1) "Why do British people save less than residents from than many other countries?"

Because they can't afford to save! Wages are so poor that there's only just enough to live on, nothing left to save.

My husband has qualifications galore. He's a Plant Operator with 33 years experience. 8 years ago he was getting £10.50/hr, this year the same employer paid him £9.50/hr. (He says that wages have gone down, due to the economy!) How can anyone save money on those kind of wages? We have absolutely no debts, we don't owe anyone a penny, yet by the time we have finished paying Rent, Council Tax, Gas, Electricity, Phone, Vehicle Expenses, petrol, food etc., etc. There is nothing left to save. We don't smoke and we don't drink alcohol either so we are not wasting our money on those things. There's nothing left for holidays or for savings.

The problem with the construction industry today is that most of these kind of jobs are in the hands of temp agencies, making money off the backs of other people. Maggie Thatcher has a lot to answer for by getting rid of Unions, a construction worker today has no job security and no-one to fight for better wages for them, Temp agencies must be rubbing their hands together with glee. If you want a job today in construction, you had better be prepared to pay out money to get your tickets to operate equipment, then pay out more money on traveling the Country from one job to another because it's much too difficult to get a job that pays you what you are worth if you stay in one place.

We love our Country, but we can't afford to live there. We can exist there, but not live. I have a husband who is willing to work as many hours as needed, he's a worker not a shirker, but why would anyone insult him by paying a highly qualified person who spent 10 years in the British Army, Royal Engineers a wage of £9.50/hr.

So, we live in Canada, we want to come 'home' but can't afford to. Here my husband is paid what he is worth $37/hr, (approx £20/hr) and £30 after 44 hours a week. We CAN afford to save here, so that's exactly what we are doing, just so we can afford to come back 'home' one day. People might think we are crazy, but we have lived in numerous Countries in the world and whatever you may think, the grass is not always greener on the other side. Every Country has it's problems, they are just a different set of problems.

So, that's my rant, but I was so upset when I saw the question Why do British people save less than residents from than many other countries? I just had to say why we couldn't afford to save and if we don't have any debts whatsoever, how do other people manage?

Dunpony

"What other policies by governments and regulators could encourage more people to save?"

Stop giving banks cheap money to offer to borrowers. That alone is depressing the savings interest rates as the banks no longer need to attract savers money into their coffers to enable them to lend

Also stop penalizing people who have built up savings over their lifetime - if you have more than a few £k you're able to get no financial help if things go wrong - whereas your neighbor gets everything paid for because he spent all his money as he earned it...

DiamondLil

How can banks and the government help us save more ?
What ????
After having spent the past thirty years encouraging, nay, urging us all to borrow as much as we can and to hell with tomorrow?
After drumming it into us that debt is good, even necessary ?
From university fees and student loans at the beginning of adulthood, to mortgages of five times salary, overdrafts, credit cards, loans pushed at us on just about everything these days, for our entire adult lives we are encouraged to take on debt.
(Sigh) I could rant all day about this subject, but I need to watch my blood pressure....

It will take at least a generation to reverse the process and change our collective mindset and get us all saving again.

SlightlySmart

What could banks do to encourage their customers to save?
- Higher interest rates.
- Provide some interactive tools (like Mint.com) via online banking so people can set goals and track their progress towards them.

What other policies by governments and regulators could encourage more people to save?
- Do something about house prices (build more), so there is some achievable goal to work towards. For many now, there isn't one so might as well spend it today.
- Reduce availability of credit. Then people simply have to save up if they want something.
- Introduce a grace period where savings don't affect unemployment benefits. If you have an insecure job/career, why bother saving up if you know that you'll have to spend it on living costs for a while the next time you lose your job? Enjoy it now, and the government will pay for your living costs when you lose your job.
- Remove/reduce penalties on savers. e.g. if you save up, you pay for your old age care, if you don't then the government pays for it.

Should the government consider ending taxation on all savings products?
- What other taxes would go up, or spending cut, to fund this?
- Perhaps only the part of interest income that is above inflation should be taxed? e.g. rate 5%, RPI/CPI 2.5%, pay tax on half of your interest income.
- The new ISA limit is way high enough for the vast majority of people - if the best interest rates were offered by ISAs rather than current/regular savings accounts there would be little reason to use any other type of savings product.

Why do British people save less than those from than many other countries?
- People (and the government) think we are richer and have a brighter future than we actually do.
- Many people live beyond their means. Culture of aspiration e.g. new cars on financ.
- People know the benefits system and state pension will always be there for them (some of that only if they haven't saved too much money).
- Low interest rates.
- Image of saving as a boring thing to do. Nobody would admit to friends/family that they save a non-trivial % of income. You'd be viewed as a boring git who needs to live a little.
- Fear that a future government may raid savings deposits above a certain level, as has happened in other countries.
- Other uncertainty that may cause savings to be lost, such as divorce.

The BBA has called for the creation of new work-based savings products that workers could transfer to different employers. Would you support this and if so why?
- Presumably the only benefit for me as a saver would be tax relief. How would the tax relief be funded?
- Why would an employer want the extra administrative overhead? Most only allow pension contributions to a single pensions provider (often uncompetitive on fees) as it is. So why tie it to an employer at all?
- I would rather my employer not know how much money I have saved (or am saving) - some employers would no doubt think to themselves "he has enough money, just saving it away, he doesn't need any more so no pay rise this year".

G_M

Am I right in thinking that in France, if you write a cheque that bounces or cannot be honoured, your bank account gets frozen/closed?

OK - cheques are 20th century now, but it's the difference in attitude.

If you can't afford to pay, don't buy. Save till you can afford it.
Get into debt, and there are (serious) consequences. I increasingly hear of people casually getting their £20/£30K debts written off via an IVA, bankrupcy or FTVA etc. The stigma and consequences of these are nothing like what they used to be.

Given this change in attitude and consequence, why should people bother to save.

(and yes, interest rates don't exactly encourage saving either).