New research shows that more than half of British adults admit to never having moved money into a tax-free savings account, while a third have less than £300 set aside for a rainy day.
In a survey of 2,002 UK adults carried out by innovative finance ISA (IFISA) provider Oaksmore, more than half (55 per cent) say they have never attempted to earn greater interest on their savings by putting them into a cash ISA.
Instead, more than a third (38 per cent) of all respondents confessed to keeping all of their money in a current account.
One in five of those surveyed (20 per cent) say they aren’t aware of the earning potential of investing in cash ISAs, while 28 per cent said that moving money into a cash ISA is not a priority for them.
Low investment awareness
Additionally, 62 per cent said they have no idea that they can invest their money into projects that directly help the economy and local communities through an IFISA – which can earn significantly more than a cash ISA.
Even those with more in the bank weren’t always savvy savers, with the study finding that one in ten Brits who claim to earn upwards of £75,000 a year also don’t move a portion of their monthly income into a savings account.
Perhaps more worryingly, however, Oaksmore found that 30 per cent of British adults have less than £300 in savings and would be unable to pay their next month’s rent or mortgage if they were to lose their job.
Getting into the habit
Reuben Skelton at Oaksmore said: “Sometimes it feels like money leaves the bank account just as soon as it comes in, but it’s so important to get into good saving habits to put a fund aside for emergencies.
“As the pound continues to lose its value and more and more people are feeling the pinch, it’s more crucial than ever to budget and move a proportion of your monthly income across into savings. And perhaps even more crucially, this proportion, however big or small should be invested wisely – somewhere that will generate the best possible returns to help turn pennies into pounds.
“It’s a real shame that so many adults are still yet to hear about the wonders of investment interest. Investing money into schemes with strong returns is a great way of topping up salaries and the interest alone can form the foundations of an excellent emergency fund to help workers stay out of financial difficulty should the find themselves out of a job.”
Introduced in April 2016, the IFISA gives regular, lower value investors the opportunity to invest into projects such as crowdfunding and community energy in a tax free structure. These are typically higher risk than the sorts of investments that go into a stocks an shares ISA, however can provide a great diversifier to investment portfolios.
To find out more see Good With Money’s latest Guide to the Innovative Finance ISA.