What is the ING Direct Consumer Savings Monitor?
The ING Direct Consumer Savings Monitor is an established quarterly economic measure which shows how much ordinary people are saving.
We’ve been monitoring savings since the beginning of 2009 and we’ve recently released the findings for the final quarter of 2011, which have revealed that ordinary people’s savings rose moderately to £1,574, an increase of £73 since the previous quarter but a £260 decline over the last year.
Most of this saving was done in October and November, leaving consumers with a buffer that they could tap into for Christmas expenses, with spare cash left over.
The latest figures also suggest that unsecured debt fell significantly during the quarter, with levels of borrowing on loans, credit cards and hire-purchase agreements decreasing by £405 to an average of £2,224. This is the lowest level recorded since tracking began in January 2009
Why is this important?
Currently there isn’t any specific information available about what ordinary people in the UK are saving. The most commonly used measure, the Government’s ONS Household Savings Ratio, looks at savings in a way that most people wouldn’t recognise – for example, part of the monthly mortgage payment is counted as savings, as eventually you will own your own home.
And many other studies of saving are heavily skewed by the fact that the richest five per cent of people in this country hold 30 per cent of the savings wealth. The ING Direct Consumer Savings Monitor uses a methodology that is not skewed by the very wealthy and so gives an accurate figure for the savings of the ‘man in the street’.
Are you saying that the Government has been misleading people about saving?
Absolutely not. The ONS Household Savings Ratio is developed by economists for economists and it measures something quite different to the ING Direct Consumer Savings Monitor.
What’s happened to savings in the final quarter of 2011?
Ordinary people’s savings have risen by 4.9 per cent (£73) this quarter, now standing at £1,574.
Isn’t £1,574 quite a lot of money?
It may sound like a large amount, but £1,574 is only a little over one month’s average ‘take-home’ pay. If you think about hitting the ultimate bump in the road – losing your job – the average length of unemployment is around six months*, which would leave most people short on savings if they found themselves out of work. The fact is that you need rainy day savings, because rainy days happen.
Are people going to increase their savings in the future?
There is certainly a growing determination among Britons to increase their savings. We hope that savings will be able to rise, but the subject of saver’s prospects is examined by ING senior economist James Knightley in the full report, which can be viewed here.
So how much should people have in savings?
The ING Direct Consumer Savings Monitor wasn’t designed in order to lecture people about how much they should or shouldn’t save. However, if you can afford it then we believe that having 3-6 months’ take-home pay set aside will prepare you for most eventualities.
So what is included in your definition of ‘savings’?
We define savings as the money that you can get your hands on easily. This means funds put aside in a savings account or cash ISAs. What it doesn’t mean is your pension, long term investments or money tied up in your house that can’t be accessed for a number of years.
How often are you going to release these figures?
We release the findings of the ING Direct Consumer Savings Monitor every quarter, usually a few weeks or so following the end of that particular quarter.
*Office for National Statistics – Labour Force Survey (Sept - Dec 2011)