Last week’s blogs discussed the savings habits of UK citizens, who are setting aside less than they used to, which is a potential problem for the lives of millions of people, particularly the young and low-paid.
As the Institute for Fiscal Studies (IFS) points out, no savings means no financial buffer for the unexpected, such as no money to pay for the vet’s bill if a pet is suddenly taken ill.
Official figures reveal that half of the people in their 20s have no savings at all, while a study by the Financial Conduct Authority (FCA) suggests that one in six people would struggle to cope with a £50 rise in monthly rent or mortgage costs.
However, people seem oblivious of this, and even free money offered by the Government has done little to reverse the situation. For example, the Help to Save scheme, which offers a 50 per cent bonus to certain people on low incomes, if they save for two or four years, has seen a take-up of less than half the level expected.
Therefore, the Government has turned to the Behavioural Insights Team (BIT), commonly known as the ‘nudge unit’ to encourage people to save by sending them reminders.
Research in other countries shows that these reminders can work if they are well-timed. The Government is now planning a trial of reminders at supermarket check-outs, both physically and for online shoppers. The scheme involves shoppers receiving messages at the check-outs of shops which will ask them whether they would like the equivalent of money saved from store discounts to be transferred automatically into their savings accounts.