The results are in—you can view them below—and there are a few surprises in the mix. We asked you whether you were putting off saving at present because you think there will be plenty of time to save later and a reassuring 79% of respondents said they weren’t. However, more than half (54%) of the respondents said they have not set up long-term financial goals so it would appear that the majority of people saving are not doing so with a particular goal in mind.
“The figures are definitely more reassuring then last year which signals a big change in people’s attitude to saving,” commented Marlene Shalton, certified financial planner with Bluefin Group and vice chairman of the Institute of Financial Planning. “It is important to have a goal—an end in sight. It motivates you to keep saving and…savers can see something tangible for their money.”
This is, of course, what financial planning is all about. Dennis Hall, certified financial planner with Yellowtail Financial Planning, agrees it is encouraging that so many are not putting off saving but surprising that the minority of respondents have established short-term goals. “Well-articulated goals help bring the purpose of saving to life, and whilst short term goals are easier to picture, long term goals can be equally vivid and motivational.” Addressing today’s theme of the ‘young, free and single,' Hall added: “This generation more than any other will need to take personal responsibility for their long term financial security as we see government and employer support for retirement income diminishing.”
This statistic is particularly pertinent given the current state of household debt. “The fact remains that as a nation we don’t save enough,” Alan Dick, certified financial planner with Forty Two Wealth Management LLP, says. “The level of household debt is far higher than is viable in the long run as we have been spending instead of saving for almost a generation.”
Returning to the numbers, 72% of respondents claim to view their monthly pay cheque with a sensible eye but 28% still see it as an opportunity to “splurge rather than save”—a move that is likely to be costly to individuals’ future finances: short-term gain for long-term pain. “If we all had a clear idea of how much our desired current AND future lifestyle is likely to cost we would be able to make informed decisions about how much to save and when,” Dick notes.
Other poll results were more encouraging: almost two thirds (63%) say the economic crisis has made them want to understand more about investing and a huge 97% believe they would have a fair idea of how to go about starting a nest egg should they find themselves in receipt of £1,000. Dick takes an interesting slant on this latter figure, however.
“I suspect the landslide result which suggests that most people would know how to invest for the long term is more a reflection of lack of financial education,” he said, adding that "the evidence of a very large savings gap in the UK suggests that people aren’t as financially aware as they might think.” Though Morningstar’s users are clearly a financially savvy lot, Dick guesses that a great many of the people who said that they would know what to do would end up placing their long term investment funds in a simple bank account “which, while unlikely to fall in value (the recent run of banking default excluded) virtually guarantees that they will lose money in real terms (i.e. after the effects of inflation) in the long run.”
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