Only £500 Savings Says Lloyds Boss

Exodi

masonic said:

Someone could be quite wealthy and have less than £500 in savings. For example, large 0% credit facility, wealth spread between an investment account, S&S ISA, properties and pension. More than 3-6 months living expenses in cash with no large expenditure planned could be considered too much for someone with a high paying secure job.

We must also remember that viewers of a moneysaving forum aren't necessarily representative of the general public. Do you think a typical member of the public would be utilising 0% credit facilities while wealth spreading across GIAs & S&S ISA's?

My sister holds her savings in a 0.2% Lloyds easy access savings account and my mother leaves hers in her current account. Anecdotal but I suspect this is more common than not.

Albermarle

Brie said:

Define savings.  I have no savings account other than an ISA I intend to use in the coming months which has £10 in it.  

I do have a flexible mortgage and am nearly £20k ahead of my repayment plan.  So while that account shows as being overdrawn I actually have £20k of "savings" in it.  

All of these 'studies' can be pulled apart, as they have to make some assumptions. Even the ONS data on wealth and finance can be interpreted in different ways. One point that often causes problems is whether you are talking about an individual or a household.

Another way to look at it, is that around 10% of households have negative wealth, and what assets they do have are usually physical, like a car, or furniture, but outweighed by debt. The next 10% have about zero wealth.
So I would guess very few in these sectors of society have any excess cash to save at all.

[Deleted User]

Seems a really low amount, wonder if other bank accounts have more in it. 

wmb194

The question that is never asked is, 'could they have £500 in savings if they wanted?' I know people who would say they have no savings but they choose to spend their money on all sorts of nice to have, discretionary things.

masonic

Exodi said:

masonic said:

Someone could be quite wealthy and have less than £500 in savings. For example, large 0% credit facility, wealth spread between an investment account, S&S ISA, properties and pension. More than 3-6 months living expenses in cash with no large expenditure planned could be considered too much for someone with a high paying secure job.

We must also remember that viewers of a moneysaving forum aren't necessarily representative of the general public. Do you think a typical member of the public would be utilising 0% credit facilities while wealth spreading across GIAs & S&S ISA's?

My sister holds her savings in a 0.2% Lloyds easy access savings account and my mother leaves hers in her current account. Anecdotal but I suspect this is more common than not.

My comment wasn't in relation to typical members of the public (I don't dispute the median individual in the UK is likely unable to survive a month without income or credit), it was just an illustrative example. I could have picked others. I was pointing out that drawing an inference that low savings means low wealth, or a larger amount of savings means more wealth, is flawed. Wealth brings access to finance professionals, who will influence wealthy people to make more canny decisions. Wealth is also itself correlated with better than average financial knowledge. If looking across the general public, then comparing across those who are mortgage free homeowners, homeowners with mortgage, those currently saving a deposit to get on the property ladder, and those renting with no prospects for becoming a homeowner, will also confuse matters. Add accidental landlords, those with GIA / S&S ISA, etc, and it starts to look rather meaningless.

Grumpy_chap

masonic said:

I was pointing out that drawing an inference that low savings means low wealth, or a larger amount of savings means more wealth, is flawed. Wealth brings access to finance professionals, who will influence wealthy people to make more canny decisions. Wealth is also itself correlated with better than average financial knowledge. 

I suspect that there are very few with "more wealth" that would have as low as £500 in instant access cash savings. 

There may well be a tipping point whereby those with less wealth (but not low wealth) might carry more in instant access cash funds than those with higher wealth.  Those with less wealth might find that having £20k is something they never dreamed of and know nothing better to do with the funds than keep it secure in zero risk.  Those with "high" wealth might well have made a more positive to keep £xxk in instant access cash, sufficient to meet any foreseeable need and have the remainder in better planned investments.

masonic said:

If looking across the general public, then comparing across those who are mortgage free homeowners, homeowners with mortgage, those currently saving a deposit to get on the property ladder, and those renting with no prospects for becoming a homeowner, will also confuse matters. Add accidental landlords, those with GIA / S&S ISA, etc, and it starts to look rather meaningless.

This just proves the lack of sense of the Lloyd's Bank statement about savings at £500.

A young person in first job with few responsibilities may well be living life to the full (and they should), but spending every pay-cheque as it arrives.  Nothing by way of savings at the end of the month, but feeling very wealthy.

A few years on, that same individual saves frantically to get on the housing ladder.  Maybe they need a £100k deposit for a small flat, so they'll go right to the top of the cash savings tree.  Then over-stretch themselves getting a mortgage resulting in a few years of constrained living.

The mortgage then falls in proportion to salary and they can build some savings as well as start to spend more on extras. 

Then children might arrive, and partner stops working so the existence becomes more hand-to-mouth.  But they might still feel wealthy as the happiness of simple pleasures can be seen by the off-spring.

The cycle of savings to strapped-for-cash will repeat periodically as changes occur and bigger home required. 

The children eventually flee the nest, so the disposable finance increases and it is a choice how much to give to setting up the next generation.  Before long retirement lump sum might arrive so back to the top of the savings tree, but possibly by then having the professional advice on better management.  A few years later, possible downsizing.

Everyone's detail and everyone's order on that seesaw will differ, but seesaw it most definitely is for the vast majority.

Ultrasonic

mark_cycling00 said:

Not many individuals have <£500 apparently.  

Average UK savings by age:

 25-34: Between £500 and £5,000
35-44: Between £5,000 and £12,500
45-54: Between £5,000 and £12,500
55-64: Between £12,500 and £25,000
65+: Between £25,000 and £50,000

(source says these are ONS statistics: https://occaminvesting.co.uk/average-savings-by-age-in-the-uk-savings-statistics/#savings)

I'm sure there are lots of fairly dormant Lloyds accounts. A better headline would have been
"Most Lloyds customers have transferred everything to Chase Bank except for about £500" lolz

Interesting link. This graph from it adds some informative detail I think (note that the three left columns are negative 'savings'):

Sea_Shell

I suppose that big jump in the brown column for the over 55s is accessing pensions and moving it into ISAs ?

Grumpy_chap

Ultrasonic said:

Interesting link. This graph from it adds some informative detail I think (note that the three left columns are negative 'savings'):

Data that needs context to be understood.
What are "negative savings"?  Bearing in mind this is not dealing with "net worth".
Does "negative savings" mean overdraft?
Where do people sit that have offset accounts?

arnoldy

In this context we should be looking at median savings not average,  this should give a better feel of the data. Also just quoting an average without a further distribution data is not helpful, savings data is unlikely to take the form of a normal distribution.