Household Savings Ratio Drops
I’ve been spending the afternoon combing through the information available on the Office for National Statistics website which is perhaps more interesting than it sounds. Admittedly a great deal of the information to be found on their site is either far too complex or far too dull to capture the imagination but there are certainly some interesting stats if you look hard enough.
According recent statistics published by the ONS the average Household Saving Ratio fell in the last quarter of 2009 from 8.4% to 7.0%. This figure represents “household saving expressed as a percentage of total resources which is the sum of gross household disposable income and the adjustment for the change in net equity of households in pension funds.” From what I understand this is the amount of money saved from each household’s disposable income per month. Typically during a recession the savings ration will rise as people put more money into instant access savings accounts to try and feel more financially secure.
From 1992 the general trend was for the savings ratio to fall as people became less interested in saving money. Loans became more readily available and job security was relatively high. The last quarter of 2009 is the first time since early 2008 that the savings ratio has actually fallen. This suggests that people are either less willing or less able to save money. In America consumers are currently spending more and saving less , in the UK people are paying a lot of attention to their current accounts and ISA rates although disposable income is still very low.
The graph showing the savings ratio over the last 5 years highlights a disturbing fact: we are more inclined to save money when we have less money to save. When credit was freely available we were much less likely to be worried about the future, we are financially short sighted. Now in the UK we have on average £2,205 each in savings account and one in four people has no savings what so ever. Those of us who do have savings are still trying to get the most from our incomes but we need to remember to save when times are good not just when things take a turn for the worse.
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Tags: finance, money, savings, stats, the economy, uk