Page 7 - Savings Psyche
P. 7

The pinch point
Where saving is stalling, and the decision-making paralysis

Making a decision requires time, motivation,                   The following sections explore in detail what drives
information, understanding and confidence.                     decision-making paralysis, and how to overcome it.
Unfortunately, in the sphere of workplace saving,
not many, if any, consumer segments have                       What’s on offer?
a sufficient supply of these attributes. This is
leading to failures in decision-making and many                The savings psyche of the UK shows that people save
workers either saving far too little, according to             through one of five methods (beyond a traditional pension
their means, or nothing at all.                                scheme to which 83% belong). Broadly speaking, the
                                                               financial products or services people use to save directly
Analysis indicates that just over a quarter (27%) of           correspond with their reasons for saving in the first place.
those surveyed are particularly apathetic and are unlikely
to have the motivation to make a choice, leading to a          As Figure 1 and Figure 2 show, people are primarily
decision-making paralysis in workplace saving.                 using savings accounts (for holidays and short-term
                                                               emergencies) and cash ISAs (for large-scale purchases),
                                                               with riskier investments (for stocks, shares and buy-to-let
                                                               properties) some way behind.

Figure 1. Most popular ways to save money

                                Savings accounts                              74%

Cash ISAs (tax-free savings accounts)                                    53%

Stocks and shares (for example market-based investments)            27%

                                Buy-to-let properties          10%

                                           Other 2%

                                None/I am not saving my money  13%

7 The savings psyche of the UK
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