Younger savers are shunning the concept of ‘saving for a rainy day’, preferring to focus their efforts on saving for specific goals, new research from LHV Bank has revealed.
The survey of more than 2,000 savers found 44% of respondents aged 18-24 felt the idea of a rainy day fund was outdated. A similar proportion (43%) of those aged 25-34 felt the same, as did 46% of 35-44 year olds.
The concept was much more popular among the over-55s, with just one in four (28%) considering it an outdated idea.
LHV Bank said younger savers are more motivated by putting money aside for specific goals, with almost half (48%) of those aged 18-24 more likely to save for particular goals, rising to 65% of 25-34 years olds and 60% of those in the 35-44 age group.
Despite this, the findings showed the majority of savers are not quite as proactive in ensuring they are getting a decent return. Although 95% regularly check their balance, 53% are not confident that their savings rate is competitive.
LHV Bank has campaigned for the industry to make interest rates more visible, ensuring savers can establish how competitive their rate is whenever they check their balance.
The bank has also encouraged people to become ‘active savers’ in order to achieve their goals more quickly.
Alex Beavis, interim director of banking at LHV Bank, said: “Saving for a rainy day is increasingly viewed as outdated, particularly among younger people, but that doesn’t mean they have switched off from saving. Quite the opposite – they are instead focusing on saving for specific goals, whether that’s a deposit on a house, a holiday or to start their own business.
“While savers are taking an active approach to saving the money needed to meet those goals, there’s a danger that their efforts are being undermined by mediocre savings rates.”
Beavis said savers are “suffering” because of a lack of transparency from providers, forcing them to wait longer to achieve their ambitions.
“Having a goal in mind isn’t enough; being an Active Saver means checking your rate as well as your balance and moving the money if your savings account isn’t working as hard as you are,” he added.
Main image: Tom-wheatley-Taq3RmOqxJQ-unsplash
