Have people stopped saving?

This was the topic of a session at finance bloggers event The Shomos a couple of weeks ago. A panel discussion included a representative from James from Vanguard, Mike from 7 Circles, Mrs Mummypenny, Lynne James and Faith Archer from Much more with Less.

Scarely, 1/4 of adults have less than £100 savings, unlike most money bloggers who have emergency fund, pensions and some have stocks and shares.

The reasons why people are not saving include poor interest rates, the global financial crisis and some debt that needs to be paid off, which takes priority.

The chap from Vanguard tried to offer an alternative, but said that barriers to entry to saving via investing include perceived complexity and the cost of investment. Vanguard offers index trackers and wants to lower the cost of investment and simplify the process. You can invest as little as £25 per month with them apparently.

He recommended that the earlier you get started the better. You can start with a small amount every month, create a plan, and track progress every year. Even if you are struggling you should have access to a workplace pension, as money is paid from your employer, so you are saving for your future.

There should be three saving pots: emergency, house and that special thing. However, circumstances change and you need to work out a happy balance.

One audience member said that younger people aren’t encouraged to invest, and there is a lack of financial education, and the fact that for many of us retirement may go on longer, meaning that you have to work longer to save for pension…and this is a vicious circle.

The best saving tips from the panel were to start young, keep it simple and tax efficient.

If your appetite for risk is low, do consider high interest current accounts.

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