Despite the challenges of the cost of living, people are saving.
- More than half 25–29-year-olds have rainy day savings
- This age bracket is putting aside nearly 4% of their annual income for the future
- 68% of 40–44-year-olds holding a sufficient emergency fund, their savings equating to nearly 7% of their annual income
“Millennials have a PR problem regarding spending habits – labelled as frivolous while dining out and holidaying more than baby boomers and generation X. But the latest HL Savings and Resilience Barometer shows this as a fallacy. In fact, with robust emergency savings, an awful lot of them can consider their investment options too, says Emma Wall, head of investment analysis and research, Hargreaves Lansdown
More than half of 25–29-year-olds have emergency savings to cover at least three months’ worth of essential spending and are putting aside nearly 4% of their annual income for the future. This rises to 64% of households for the 35–39-year-old bracket, who manage to squirrel away on average 6.7% of their annual income.
Savings rates peak in your 40s according to the latest data.
68% of 40–44-year-olds holding a sufficient emergency fund, and their savings equate to nearly 7% of their annual income. This is despite the cost-of-living crisis, which continues to polarise households into haves and have-nots. Also following two years of above target inflation, fuelled by rising food and energy costs – as well as rising rent and mortgage payments.
Younger investors are under pressures such as rising rents and bills, student debt, and inflation, so the levels of savings that they are still managing to acquire are impressive. Yes, it is lower than other age groups, but that is not unexpected. What is important is that, where possible, people build their resilience over time so that as life’s curve balls hit, they are best equipped to deal with them.
After putting aside sufficient emergency savings, to build further financial resilience, consider investing for medium to long term financial goals. Savings platforms collate easy-access, fixed-term, and ISA savings products in one place so you can easily manage your savings pots and maximise the interest you earn.
Set up a direct debit on pay day for savings / investments
Setting up a direct debit on pay day means you don’t need to remember to prioritise your financial health each month. Most investment platforms allow you to set up a regular investment plan from just £25 a month. This is paid via direct debit, so once set up needs no extra effort.
If you are investing for the first time, steer clear of stock-picking.
Instead, Hargreaves Lansdown suggest looking for broad market exposure for a low cost, such as an iShares ACWI ETF – invested in more than 2,000 companies from developed and emerging markets. This is a great core option for first-time investors, and you can add satellite holdings that reflect your outlook or interests. Note this ETF is invested in all stocks, which should deliver better longer-term returns than other asset classes but can be volatile on the way there. More cautious investors who do not feel comfortable with being bounced around should instead opt for an open with bonds mixed in – for example, Schroder Managed Balanced.
You’re employed if you’re investing long-term – to pay for your retirement adventures. Often, the most sensible course is to max out your workplace pension contributions. It is free money – as you get top-ups from your employer and the Government.”
HL Savings and Resilience Barometer data
| Age | Share of income saved |
| 20 to 24 | 1.0% |
| 25 to 29 | 3.7% |
| 30 to 34 | 4.8% |
| 35 to 39 | 6.7% |
| 40 to 44 | 6.9% |
| 45 to 49 | 6.6% |
| 50 to 54 | 5.5% |
| 55 to 59 | 4.1% |
| 60 and over | 3.0% |
| Age | % of households that have savings stashed for a rainy day |
| 20 to 24 | 30.8% |
| 25 to 29 | 53.0% |
| 30 to 34 | 57.5% |
| 35 to 39 | 64.2% |
| 40 to 44 | 68.3% |
| 45 to 49 | 67.4% |
| 50 to 54 | 66.8% |
| 55 to 59 | 68.7% |
| 60 and over | 64.6% |
About the HL Savings and Resilience Barometer
This is a huge piece of analysis HL does every six months in partnership with Oxford Economics, bringing together 16 separate measures from official datasets, and using statistical modelling to build an overarching picture of people’s financial resilience – from how much savings they have, to whether they’re on track for a reasonable retirement income. It gives an overall picture of whether we are getting stronger or losing resilience, and tells us where the gaps are in people’s finances.
It is structured around the five pillars of financial behaviour that are fundamental in order to balance current and future demands, while guarding against risks.
- controlling your debts,
- protecting your family,
- saving for a rainy day,
- planning for later life
- Investing to make more of your money.
