Savings buffer - makes sense but how to incentivise?

michaels

I'm thinking we do have compulsory insurance type buffers (and how different is that from savings?) that come in two forms:
1) Tax and the welfare state
2) Compulsory private insrance for car drivers

And we could expand either of these if we wished, for example:
a) Perhaps all purchases could include compulsory insurance and a fixed lifetime - ie you don't buy a boiler you by 10 years of boiler service
b) Taxes coudl be increased and include compulory insurance that would pay out on certain unpredicable but high likelihood events - in effect some sort of compulsory friendly savings society with a fixed list of circumstances that allw a withdrawal.

As I said above these are not new products, compulory insurance is already in place for cars and umeployment benefit and the health service are examples of the later.

Govt insurance does not need to be the same as govt provision, the NHS demonstrates where they are the same, unemployment cash payments shwo the opposite extreme wher ethe unemployed are given money to live on rather than being given essentials such as food and energy directly.

Thrugelmir

wotsthat wrote: »

Can't force people to budget which is the main issue.

Perhaps not. But when the a huge proportion of the population lives on credit. Mortgages, BTL, Cars, Furniture and not forgetting credit cards. Then good habits get forgotten and lost. The next generation behaves like their parents. Want it now. Pay later. That's why many are now heading towards retirement in financially poor shape. Been partying too long.

MARTYM8`

So why aren’t people saving?

Might be worth asking why many families don’t have funds spare at the end of the month – rent/mortgages due to the high cost of housing may be a factor?

michaels

MARTYM8` wrote: »

So why aren’t people saving?

Might be worth asking why many families don’t have funds spare at the end of the month – rent/mortgages due to the high cost of housing may be a factor?

The original report is from 'step change' who I suspect know a thing or two about the finances of the people they help. The issue is surely how much the lack or control on spending is costing people.

Go without sky and an iphone for a year so you can pay for things up front rather than via expensive credit and you almost certainly save enough in interest and charges to then afford the things you gave up for a year...but try convincing people to do so.....

PasturesNew

michaels wrote: »

Go without sky and an iphone for a year so you can pay for things up front ...

What of those who have never had sky or an iphone?


If I could do one thing to make saving easier for "the little people" it'd be to make available a simple over-the-counter bank account (like Giro Bank used to be), where they can have up to, say, £5k in it tax free (like an ISA).

For "the little people" ISAs are too complex and one fears the inability to get your hands on the money quickly.

Putting money in should be easy - getting access to money should be easy. Post Office/Giro bank used to provide a good service, with good coverage.

Simples.... and no extra cost. Easy to understand, easy to use. People could walk into a PO with their book/card/whatever and just pay in a few quid at a time. Job done.

Banking has morphed into something very complex these days, with deals and rules on accounts .... no need.

All banks could provide the accounts.

kabayiri

PN : what you describe is a basic bank account really.

There is an article on MSE about them. They remain relatively unknown.

kabayiri

Controversial, possibly, but ....

Have some people fallen out of love with money?

I read through some hifi forums, inhabited predominantly by the middle and older generations.

Comment on savings is often accompanied by derisory notes regarding the interest available.

I've seen some people instead buy rare or classic hifi. Obviously it's a risky business, but some items have soared in price in recent years.

Plus....when a debt collector calls, it just looks like a bit of tat!