A series of interest rate hikes has led to more people saving now than in the past few years.
Research by Legal & General shows 62% of adults were in the “mood to save” last month, a 2% rise on June 2005 and 2006. Spending moods fell since last August and spending is now at its lowest level in three years.
Adrian Boulding, wealth policy director at Legal & General, tells IFAonline: “I think the party is coming to an end. The nation has been on a massive spending party for a long time now and people have begun to realise when you borrow to spend eventually you have to pay it back again. The nation is waking up to reality and the reality is that you should only spend according to the budget you’ve got coming in and you should plan ahead by saving in advance.”
Boulding says the saving trend is gradua: “It’s a very deep down subconscious decision that people make and you make those decisions gradually.”
“It’s an opportunity for us as an industry to help people save for the long-term. Savings shouldn’t be about putting a bit in the building society, it should be about a culmination of building societies and alternative assets like stocks, shares, ISAs and bonds. We should help people save for the long-term and long-term planning needs an IFA.”
The survey also found the percentage of households who have money to spend after bill and debt payments has fallen from 61% to 57% over the last 12 months.
Julia Clayworth, wealth management customer marketing manager at Legal & General, says: “That would suggest more households are finding themselves in a position where they are struggling to make ends meet compared to a year ago when rates were down at 4.5%. These findings reinforce the consensus view that the Bank of England should ‘take its time’ before raising rates again to measure the full impact of the latest rise.”
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