Brits increase savings

The British have increased their savings 39 fold in real terms since the early 60s and 31% since 2000, despite talk of soaring consumer debt, according to NS&I's (National Savings and Investments) Century of Saving report. The report also predicts that the savings ratio will rise significantly in the years ahead, though it could be 50 years before the majority of Brits become regular savers.

The Century of Saving report, which reviews the past 50 years and future 50 years of saving, conducted for NS& I by think tank The Future Foundation reveals that gross savings have risen significantly from just £1.1billion in 1957 to £43.9billion in 2007. This reflects both rising affluence and savers' increasingly sophisticated approach to building their nest eggs. Looking to the future, the research also forecasts that the savings ratio will rise further to 7.5% in the long term, up from 5% in 2006 and from a 50 year low of 3.7% in 2004.

Furthermore, 50% of adults look set to become regular savers by 2060, seeing diligent savers creep into the majority for the first time, though this milestone may even take place as soon as 2057. This represents only a very gradual rise from today's 43% (British Household Panel Survey), despite the large rise in total savings that is being seen.

Changing attitudes to saving

The research by The Future Foundation demonstrates that the more fundamental motivations for saving are to provide long-term security for ourselves, and just now and then, for making dreams come true. As technology advances it is becoming much more convenient and easier to save on a regular basis.

The report has also identified a number of changes in the way people are saving:

Savers are becoming increasingly sophisticated, holding savings longer while also moving to more competitive savings vehicles from old-fashioned cash-based savings schemes, such as Christmas clubs.

Savers now have longer planning cycles than in the past. Whereas in 1957 most families received weekly pay packets and saved weekly accordingly, modern working practices have pushed the proportion of households saving weekly down. Of the 43% of households that save regularly, in 2007 approximately 7% saved weekly, while the other 36% of regular savers set money aside on a monthly basis.

Near ubiquity of online banking use is predicted by 2057, having already risen from 3% in 1999 to around 28% of banking customers in 2007. The change will be driven by more people using the internet on a daily basis and a move towards more flexible working hours. However, with official forecasts (Source: Government Actuary's Department, figures extend to 2044) suggesting there will be 1.5 million people aged over 90 in 2057, there may still be demand for traditional branch banking, from customers either less adept with using new technology, or preferring to transact using face-to-face channels.

Dax Harkins, NS& I's senior savings strategist adds: "Advances in technology, over the last half century such as telephone and internet banking, have made it easier for savers. We expect future developments will play a part in boosting the future savings ratio by making new products possible and allowing new ways to access them using convergence products such as Apple's iPhone."

"However, simple measures can still prove the most effective. Setting up a standing order to make an automatic savings contribution just after pay-day is one of the most effective ways to ensure that saving becomes a lifetime habit."