UK employees think they need £361 extra income each month to save more, according to new research by JLT Employee Benefits (JLT), a leading employee benefits consultancy in the UK. This equates to a national savings gap of £9.7bn* per month.
JLT’s findings indicate that self-control, lack of knowledge and personal circumstance are the top three factors limiting Britons’ current saving levels, marginally outweighing trust and upbringing.
The report concludes that employers are well-positioned to help their workers take steps to improve their financial wellness. Beyond family and friends, JLT research shows that employers are the most trusted port of call for assistance and guidance around future finances, ranked ahead of pension providers and the government by those surveyed.
One group, identified by the research as high-risk, is particularly in need of renewed support around saving and broader financial wellness. This group comprises the 20% of UK workers currently earning less than £30,000 a year (9% earn less than £20,000) and renting or living with friends.
Commenting on the research findings, Nick McClelland, Director at JLT Employee Benefits, said:
“Our findings demonstrate the scale of Britain’s savings problem. The perceived need for an extra £361 a month cuts to the heart of the dilemma. However, the answer to this problem is a not a pay rise for British workers – this isn’t feasible. Rather, we need a mindset adjustment from all stakeholders.”
Personality not income drives propensity to save
Contrary to received wisdom, the research found that neither age, nor household income is directly correlated with the propensity to save. Instead, JLT research demonstrates that saving behaviour is heavily influenced by personality traits, particularly neuroticism – driven by impulsive decisions, social anxiety and sensitivity to distress – and conscientiousness – motivated by deliberation and a need for order.
Current pressures on income are the most significant determinant of financial wellness across all age cohorts. Younger age groups identified knowledge as the next most important factor in determining their financial position, while older groups said their saving habits are more goal-oriented.
Nick McClelland added:
“For too long stakeholders and the media have tried to label low saving levels in the UK as a generational issue – the outcome of a ‘millennial mindset’ – failing to acknowledge that this is a much broader question of education and support.
“Employers are uniquely positioned to step in and help their employees reassess their financial wellness. Helping employees to feel more confident about money and helping them to talk openly about their financial situation is the first step. It’s time to start talking to your employees about the things that matter to them.”