Personal Finance

Wednesday 20 August 2014

Rise in the number of those not saving

Charlie Weston, Personal Finance Editor

Published 11/03/2014 | 02:30

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People can't afford to save for a rainy day

THERE has been a rise in the number of people who are not saving.

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Almost four in 10 people are not putting money aside into a bank account or a credit union, a new survey shows.

Most of those who are not saving say that they have no spare money, the latest figures from the Nationwide UK (Ireland) savings index shows.

The proportion of people not saving rose from 36pc to 38pc in February.

Some 84pc of those who don't save say that their reason for not saving is that they have no money left after paying for necessities.

The rest of the people who are not saving say they would prefer to spend any spare cash they have on goods and services rather than put funds into a deposit account.

The Nationwide UK (Ireland)/ESRI Savings Index, which measures people's attitude towards saving, was unchanged in February.

But there has been a recovery in the numbers who are regularly saving, which had fallen significantly in the previous three years.

Nationwide UK (Ireland) managing director Brendan Synnott said that while the index was unchanged last month, the underlying trend is showing a recovery in regular saving to normal longer term levels.

REASONS

More than a third of respondents said they were saving regularly.

"We have seen a change in reasons for saving in the past year. There has been a decline in saving for precautionary reasons and an increase in saving for a house purchase or renovation.

"This seems to indicate that more people are making specific plans to spend, nonetheless the economic environment will have a major influence on whether these plans are acted upon."

One in 10 said they were saving to buy or renovate a home, an increase from 6pc a year ago.

A majority of people believe that government policy discourages saving.

At the start of this year the tax on interest earned on savings jumped from 33pc to 41pc. And some people will have to make PRSI payments on any interest they earn. Banks have also been cutting the interest rates they pay for deposits over the past year and a half.

The best rate for funds that can be withdrawn without notice – called a demand deposit account – is available from KBC Bank. The bank pays 2.3pc on amounts over €3,000.

But this rate will be cut to 2pc from May 6.

Both Permanent TSB and RaboDirect pay 2pc on their demand-deposit accounts with no minimum deposit.

Irish Independent

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