Squeezed incomes are leaving savings vulnerable

26 Dec 2013 09:25 GMT

  • One in nine (11%) savers are dipping into their nest egg on a monthly basis, to cover unexpected outgoings and day-to-day living expenses.
  • Four in 10 (38%) Britons have less than their household monthly income in savings.
  • Over two thirds (67%) say they are not saving as they simply do not have any spare income.
  • A third of the UK (34%) didn’t save at all during 2012.

Prolonged weak wage growth and squeezed spending power are limiting people’s ability to save. Many consumers admit to regularly dipping into their savings accounts to cover every day living expenses, according to the Lloyds TSB Savings Index.

Savings making up the shortfall for rising living costs

Savings accounts are the back stop for many consumers as money runs tight, with over half (53%) of savers regularly accessing their savings throughout the year. One in nine (11%) are doing this on a monthly basis, 16% dip-in every couple of months, and a further 26% raid their account a couple of times a year.

Just under a third (30%) of savers are accessing their funds to cover unexpected outgoings, which could include emergency household repairs or car maintenance. Similarly, one in five (21%) are using their savings to cover day-to-day living expenses, and a similar amount (20%) use their savings to avoid going overdrawn.

With growth in spending on essential items remaining fairly strong in December 2012, this latest research indicates that a large number of consumers are relying on their savings to bridge the gap between the rising cost of living and flat incomes.

Britons’ savings pot could fall short if households’ circumstances change. On average, consumers believe that the minimum amount they need in savings for a rainy day is the equivalent of two and a half months (2.45) of their household income. However, in reality, four in 10 Britons admit to having less than one month’s household income in savings, with the average amount saved being less than two months (1.89) equivalent household income. As such, we can clearly see that there is a discrepancy between the amount people think they should have and the amount they actually have.

As a result, a fair proportion of the UK population could be exposed should their circumstances change for the worse or if they are hit with unexpected bills.

The desire to save remains strong however, a lack of spare income is preventing many. The UK population has not forgotten how important saving is – over 85% agree that it is important to save regularly, with 78% agreeing that they try to save any spare money that they have. However, the report indicates that many are struggling to commit to saving, with a third (34%) saying they weren’t able to save at all in 2012, and just under a quarter (23%) say they have saved a regular amount on a monthly basis.

The principle reason behind people not saving is that many consumers simply do not have the spare income to put aside for these rainy days, with over two thirds (67%) stating that this is the reason behind their lack of saving activity. The future doesn’t appear to be much brighter…a small bunch of optimists believe that they will be able to save more in the year ahead (17%) but a larger proportion, just under a third (32%), believe that they will either have to reduce the amount they spend or stop saving all together.

Andy Bickers, Savings Director, Lloyds Bank comments:
"The nation’s wallets have been under much strain for some time now, so it is not surprising that savings have move down the priority list for many.  Although, it is encouraging that so many agree that it is important to save, it is clear that many are struggling to do so in the current climate."

Contact us

If you have a general enquiry you can contact the main head office switchboard on 020 7626 1500.

Our Press Office do not have access to customer details and will not be able to assist with individual customer enquiries.

If you are a customer please see: Lloyds Bank contacts.

Tweet our customer service team


  • Get answers to Internet Banking queries
  • Receive news and product updates
  • Share your feedback and experiences