The study found ambivalence towards saving and a perception that there is no strong positive social norm for saving was prevalent among those who were not saving-engaged. Where people described saving as being unaffordable this generally meant they were unwilling to compromise current living standards to save or they thought saving only small amounts was futile. Through their discussions with each other, however, participants did come to see saving as affordable and worthwhile.
The study’s participants were invited to consider what might encourage them to save more. Deposits made automatically and at the start of the budgeting cycle were particularly attractive, partly because they militate against the perception that the money saved would be missed. Those who were the most constrained financially particularly welcomed the idea that employers, financial services providers or the Government might instigate this on their behalf.
Mechanisms that would enable people to keep the savings they accrued ‘at arm’s length’ were also regarded as paramount for encouraging saving. Ideas included 48-hour notice accounts, accounts where money could only be withdrawn over the counter but could be deposited in other ways, and having separate accounts for bills, day-to-day spending and savings.
Andrea Finney, co-author of the research said: “Our findings suggest that many people on low incomes who struggle to save can be encouraged, with the right messages and the right context, to see saving as both affordable and worthwhile. Moreover, so-called ‘commitment devices’ to save into formal accounts, like setting up automated deposits at the start of each week or month seem to offer the very means by which some people could be encouraged to save at all.”
The research was undertaken by the Personal Finance Research Centre, University of Bristol with funding from Provident Financial. The full report can be accessed here.
The study, 'Towards a nation of savers: Understanding and overcoming the challenges to saving on a lower income' by Andrea Finney and Sara Davies, is published by the Personal Finance Research Centre, University of Bristol, 2011.
The study will be launched today at an event organised by the Social Market Foundation (SMF) and the University of Bristol at the SMF, 11 Tufton Street, London.
The Bristol study involved 30 depth interviews and four focus groups with adults aged between 25 to 55 living in lower-income households.
Participants were recruited to reflect whether they were ‘saving-engaged‘ (saving actively using regulated provision) ‘saving-inclined’ or resolute‘non-savers’, based on their current behaviours and attitudes.
Analysis of the 2006-08 Wealth and Assets Survey was also undertaken.