Less Than £100 in savings?

Rosemary7391

veryintrigued wrote: »

Its not the full story me thinks.

I reckon a lot of the people with 'no savings' in those dark red patches will be 'younger' people who've made it into the housing ladder in the non South areas.

Whereas I suspect lots of those in the 'more affluent' South will be older and saving (and saving) for that first house.

Just my thoughts

If you own property and haven't even got £100 spare you've got problems. You can't fix or replace any appliance that breaks, you'll worry about calling in an electrician or plumber should the need arise, and if something major goes like the boiler, well, good luck.

Even for non property owners, a day or two off work ill, car breakdown, sudden need to visit a relative - all those could put you in debt, and how do you pay it if you've no money spare in the budget?

veryintrigued

Rosemary7391 wrote: »

If you own property and haven't even got £100 spare you've got problems. You can't fix or replace any appliance that breaks, you'll worry about calling in an electrician or plumber should the need arise, and if something major goes like the boiler, well, good luck.

Even for non property owners, a day or two off work ill, car breakdown, sudden need to visit a relative - all those could put you in debt, and how do you pay it if you've no money spare in the budget?

I didn't mention £100 - the MAS article goes on to talk about £1000 and I'd bet you 1000 virtual pounds that its as Ive said.

More 'savers' in the south who are desperately trying to get on the housing ladder rather than those in more achievable areas.

Rosemary7391

veryintrigued wrote: »

I didn't mention £100 - the MAS article goes on to talk about £1000 and I'd bet you 1000 virtual pounds that its as Ive said.

More 'savers' in the south who are desperately trying to get on the housing ladder rather than those in more achievable areas.

Well that's slightly different. I've only read the BBC article that talks about £100. I think I'd still want more than £1k though - repairs can be expensive - but different people have different attitudes to that sort of risk.

jimjames

Rosemary7391 wrote: »

Well that's slightly different. I've only read the BBC article that talks about £100. I think I'd still want more than £1k though - repairs can be expensive - but different people have different attitudes to that sort of risk.

Repairs can indeed be expensive. Boiler failure followed by expensive car repairs would sink many people.
I really would be fascinated to see the finances of some of the people in this survey. While a proportion may well be on minimum/low wages, I find it extremely unlikely that 50% of the population are in that position and from experience at work there are people in good, well paid jobs that still have no savings. A comment I saw earlier reminded me of this, person had fault with their car but "I can't do anything about it until after payday".

TheShape

There are undoubtedly people who have no savings because they do not earn enough to be able to put some money away.

There are other who are not very good at managing money.

For example, one of my work colleagues has told me that she cannot afford to replace her ageing/inefficient/unreliable vehicle, as she hasn't the savings to do so. She earns in the region of 28K per year and her husband works full-time also (I'd guess from his job that he earns approx 20K). I'd imagine that they could save but they appear to spend an extraordinary amount of money on their children for birthdays, Xmas, days out, holidays to DisneyLand/World. They 'save' money but then spend 'a lot/the lot' on these things.

Another colleague will have an expensive foreign holiday each year but then have no money a week out from pay-day for a few months after.

It's a concern that both of these people could suffer real financial hardship following an unplanned expense.

Apodemus

If you look at the Money Advice Service's own news release on this story, it shows that 45% of those with no savings had household incomes above £30k and concludes that attitude rather than ability is the key problem. They cite 49% of those who could save as saying they would rather live for today rather than plan for tomorrow and 47% with no financial goals.

In terms of coping with emergencies, there are plenty of threads on personal finance forums like this where there are genuine debates on whether it really is better to hold a cash buffer for emergencies or have that money invested and rely on credit cards to meet any short-term need.

Personally, I keep far too much as a ready-cash buffer, which would be better being put into additional pension payments or other long-term investments.

TheBanker

I have savings and I split them in two. Savings for a specific purpose (in my case a house move) and savings for an emergency/planned annual expenses such as car service. I don't think of the latter as savings really, more an extension of my current account that can be topped up in good months, and called upon in bad months.

I have a friend who is paid weekly, and he draws the entire week's wages out of the ATM on a Friday and spends most of it over the weekend. By Wednesday he is scrabbling around for his bus fare. If there is an emergency he has to borrow the money or wait until the next payday.

When I suggest leaving somthing in the bank and having a couple fewer pints each week, he doesn't seem to get why I am suggesting this.

Sometimes, he will actually go into the bank to withdraw the balance <£10 that he can't get from an ATM.

Last year we had a family emergency. While the eventual costs were reimbursed through insurance, we had to spend the best part of £5k over a couple of weeks. If we hadn't had easily accessible savings we would have been in a real pickle.

It really does worry me.

veryintrigued

Rosemary7391 wrote: »

Well that's slightly different. I've only read the BBC article that talks about £100. I think I'd still want more than £1k though - repairs can be expensive - but different people have different attitudes to that sort of risk.

The BBC article does mention the £1000 but I agree from a personal perspective I too would want more than this level - but we're clearly in the minority.

As has been mentioned above this is just a headline grabbing article and I too would love more detail about the full financial situation of those interviewed including their housing situation. There must be some figures on home ownership versus savings.

PS heres a further recent article which references my concerns:

http://www.bbc.co.uk/news/business-37508968

bowlhead99

veryintrigued wrote: »

The BBC article does mention the £1000 but I agree from a personal perspective I too would want more than this level - but we're clearly in the minority.

Wanting more than that level would be expected from someone who frequents money saving forums, but only a minority of people frequent money saving forums.

And many that do, frequent them to find out how to get more 'stuff' for their money, rather than how to actually put away decent amounts of money for saving or investments. Martin's moneysaving email each week is typically stuffed with tips how to get a good deal when buying something, rather than how to not buy anything.

Personally £100 or £1000 in the bank is of little use to me. It isn't an amount that would pay my bills and mortgage for very long if I lost my job, and it isn't enough for a big emergency expense like a new boiler or a roof. If I had an unexpected car or home expense for £99 or £999 before payday it would fit on a credit card or, potentially more expensively, an overdraft.

So, no real incentive to have £1k of cash because it doesn't appear to solve any short term problems and isn't enough to cover long term ones.

There is an incentive to have tens (or fives) of thousands of pounds as a proper emergency fund, which would practically be 'worth having', unlike the token £100 in a bank. But it is somewhat difficult to convince a family who are currently living hand-to mouth that they should have an emergency fund of tens (or fives) of thousands of pounds in the bank commensurate with their salary level, when the first steps towards that goal - saving £100 somewhere, or saving £1000 somewhere - doesn't actually appear to give them an immediate practical benefit when viewed from the perspective I just outlined.

I'm fortunate that I have a good salary and some investments or other things I could dispose of or downsize to release cash (like a nice car) in a pinch, and I don't choose to have 6 months salary or expenses in ready cash. But I can well understand the mindset of the bloke who doesn't want to cut out spending on a fiver's worth of beer that weekend, when having £5 or £50 or £500 in the bank wouldn't actually get him something tangible there and then, or even significant 'insurance' against some big scary concept like a jobloss. There are millions of people who think they will just deal with it when it happens, whatever it is. Not saying they're right, but easy to understand.

Rosemary7391

bowlhead99 wrote: »

Wanting more than that level would be expected from someone who frequents money saving forums, but only a minority of people frequent money saving forums.

And many that do, frequent them to find out how to get more 'stuff' for their money, rather than how to actually put away decent amounts of money for saving or investments. Martin's moneysaving email each week is typically stuffed with tips how to get a good deal when buying something, rather than how to not buy anything.

Personally £100 or £1000 in the bank is of little use to me. It isn't an amount that would pay my bills and mortgage for very long if I lost my job, and it isn't enough for a big emergency expense like a new boiler or a roof. If I had an unexpected car or home expense for £99 or £999 before payday it would fit on a credit card or, potentially more expensively, an overdraft.

So, no real incentive to have £1k of cash because it doesn't appear to solve any short term problems and isn't enough to cover long term ones.

There is an incentive to have tens (or fives) of thousands of pounds as a proper emergency fund, which would practically be 'worth having', unlike the token £100 in a bank. But it is somewhat difficult to convince a family who are currently living hand-to mouth that they should have an emergency fund of tens (or fives) of thousands of pounds in the bank commensurate with their salary level, when the first steps towards that goal - saving £100 somewhere, or saving £1000 somewhere - doesn't actually appear to give them an immediate practical benefit when viewed from the perspective I just outlined.

I'm fortunate that I have a good salary and some investments or other things I could dispose of or downsize to release cash (like a nice car) in a pinch, and I don't choose to have 6 months salary or expenses in ready cash. But I can well understand the mindset of the bloke who doesn't want to cut out spending on a fiver's worth of beer that weekend, when having £5 or £50 or £500 in the bank wouldn't actually get him something tangible there and then, or even significant 'insurance' against some big scary concept like a jobloss. There are millions of people who think they will just deal with it when it happens, whatever it is. Not saying they're right, but easy to understand.

That's a different perspective for sure. Until recently I haven't had access to very much in the way of credit and haven't had a reliable income, so saving was essential. I still wouldn't like to have to put a major thing like a boiler on a credit card and pay interest on it. Also, having savings means I am saving; the money exists in my budget to pay off credit should an expense exceed my savings, without having to cut back.

I guess it depends on your level of income/expenses as well. £1k would pay my essential bills for 2 months, so it seems worth having and then it'll be natural to top it up when my income and expenses increase. If you're starting saving from a position where you'd need to save for a very long time to get anywhere useful it's harder to start.

(I also know I'm going to be without an income, looking for a new job and probably moving house, possibly internationally, in the next 2 years, so there's a really good incentive to save!)