New report finds average Welsh consumer needs £12,400 more in savings to feel financially secure.
Wales is currently facing a £31 billion savings shortfall and the average Welsh consumer needs £12,400 more in savings to feel financially secure, that’s according to the latest research from the Yorkshire Building Society.
A report which was conducted in partnership with the Centre for Economics and Business Research (Cebr) finds that despite Covid-19 restrictions helping many people to increase their savings pot, UK adults require a nest egg of £17,465 to feel financially secure with the average Briton needing an additional £7,220 to reach this goal.
Consumers in Wales face the largest shortfall, with the average person requiring an extra £12,401 to feel financially comfortable.
The study seeks to analyse consumers’ financial resilience – their ability to withstand financial shocks and how that impacts their behaviour.
It reveals that despite the turmoil of the pandemic, that Wales’ overall financial resilience has remained constant, at 46 out of 100 for both 2019 and 2020. Whereas, the UK’s overall financial resilience has improved over the last year, rising to 57 out of 100, up from 44 in 2019.
This score has been determined by assessing four key pillars which can be considered together to present an overall picture of financial resilience: shock resilience, probability of income shock, financial health and ability to plan for difficulty.
The shock of the last year has caused many to reassess their attitudes towards savings, and as a result almost a third (31%) of Welsh consumers state they will save more carefully post pandemic, whilst 36% will spend more carefully.
People have also become aware of the impact that money worries can have on their wellbeing, with a third (31%) of Welsh consumers stating that greater financial security would make them feel less anxious or depressed.
To increase our financial resilience, most people would like more money in cash savings (37%), followed by owning a property (26%) or having more money in investments (24%).
Despite the year-on-year improvement in the nation’s ability to cope with income shocks, Yorkshire Building Society believes more needs to be done to help people to build their financial wellbeing through savings, particularly in light of this new analysis.
Nitesh Patel, strategic economist at Yorkshire Building Society said:
“The country has been battling the impacts of the pandemic for the last 18 months, and we can now paint a comprehensive picture of how the crisis has impacted the nation’s financial resilience.”
“We know that people’s opportunities to spend have been curtailed whilst many who have been working remotely have found a reduction in their outgoings.”
“This has resulted in additional savings of £190bn over the last 16 months.”
“However, this isn’t necessarily reflected in Wales with the household savings rate remaining at 0% in both 2019 and 2020 as such it’s clear there are still pockets of society who have been more significantly impacted than others, and therefore are more likely to be in need of financial support and education on how to improve their financial situation.”
“When looking at the drivers behind Wales score resilience remaining constant, its fuelled by its strong scores in both probability of income shocks and financial health, ranking 2nd and 3rd in these areas respectively, however it ranked worst for shock resilience.”
“As the economy gets back on its feet, its essential that we remember that many people have been made more financially vulnerable by the impacts of the pandemic, and as a Society we are here to help them in their time of need.”
On a regional level, the East of England proved to be the most financially resilient region, scoring 61 out of 100.
This was followed by the Scotland (56) and London (48) and Wales came in sixth (46). The North East proved to be the least financially resilient region, scoring 40.
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