The Savings Habit

A confession. My son has a serious habit.

He’s had it for quite some time. It started early on.

It’s a habit that more of us ought to have. His ‘crime’? He saves his spare cash. Having started on an easy access account, he has now diversified his portfolio and graduated to the heady heights of a Stocks and Shares ISA. I explained the risks and began to sound like one of those rapid-fire announcements at the end of a radio commercial. You know the one, “The value of your investment can go down. Past performance is no guarantee of future return… etc , etc”. I was met with the not unreasonable response: “Yes Dad I know it can go down but look at the interest I’m getting on my online savings account, and anyway I’m not putting it all in, so I’m taking a reasonable risk” He has a point.

So where did he get his savings habit from? Not me I’m afraid. While my Scottish genes give me a painful feeling of loss every time I reach for my wallet, or more likely the Google Pay app, I’ve never been particularly good at saving the stuff.

In my son’s case, birthday money (mostly) and the wage from a Saturday job at Waitrose went into an account for the purpose of buying his first car. Having reached that milestone relatively quickly, the next target is a deposit for his first house.

He’s lucky. Many of us just don’t get into the habit of saving. And particularly at an early age. Having access to a savings pot at times of need is a luxury that many of us just do not have, either by choice or more likely by circumstance.

Raising a family, unexpected life events, or something that always seems more important; all good ‘reasons’ we use to avoid taking the plunge. I get that, I’ve been there.

But, getting used to saving whatever you can afford, putting away a little every month, while still having convenient access to it is important. But like everything, it’s the first step that counts.

Parents, schools, charities, financial institutions all have a part to play. Do we teach our children enough about the importance of saving? What is the difference between a ‘fixed term bond’ and an ‘easy access account, what is a ‘good’ interest rate and how do you ‘feel’ about building up a nest egg?

I know how my son feels about his growing nest egg, as he tells me often enough how much he’s saved each month or what movements have taken place in his Stocks and Shares ISA (thankfully mostly positive). But a curious thing has happened. The more he saves the less inclined he is to spend it!  Perhaps I should take lessons from him?

Written by Alistair Nimmo, Director of Marketing at Family Building Society