.jpeg?trim=0,49,0,49&width=1200&height=800&crop=1200:800&w=696&resize=696,0&ssl=1 "The savings ‘ladder’ trend UK adults are using – and what Gen Z savers want instead")
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There is a growing divide between what older and younger people are looking to achieve with their money as interest rates fall and different generations prioritise different factors – with the “ladder” trend proving popular among older savers.
Data from Investec suggests four in ten adults are now arranging their savings by splitting it into multiple fixed-term accounts, with each ending at different times, ensuring they constantly have a supply of cash becoming available – before adding it into a new fixed term deal.
That has inspired the term ‘savings laddering’ – with each subsequent arrival of available cash, plus interest earned deemed a new “rung” climbed.
But it highlights a dilemma for banks and building societies as to what products and perks they offer – depending on the client they hope to attract.
Fixed term accounts, or bonds, are typically available for six months, a year, two years or longer, though some offerings may have specific dates when the account matures and interest is paid.
Staggering when those batches of cash become available also means the saver has a steady supply for in case it is suddenly needed.
The advantage of taking fixed-term deals is that you are guaranteed a predictable income at the end of term (or for each year of it, if longer), even if the Bank of England changes interest rates in the meantime.
However, the downside is that the money is usually locked away and inaccessible during the same period, or at least not without penalty.
That’s all in contrast to how younger people seem to be attacking the topic of personal finance.
While data from Barclays Property shows young adults are confident about their prospects of getting on the property ladder, some new data suggests earning additional cash through higher interest rates are far from top priority, painting a muddled picture of the facts.
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More than a third (34 per cent) of 18-34‑year‑olds are aiming to purchase a new or first home this year, says the research, a number which is more than double the UK average of 16 per cent.
However, Gen Z value perks and free coffees over better interest rates, says research from pay.uk’s Current Account Switch Service.
Two standout pieces of data from that research suggested almost three-quarters (72 per cent) valued banks that rewarded everyday spending over financial milestones, more than half (51 per cent) said perks such as free coffees, food discounts and cashback were more valuable to them than interest rates being higher – and 53 per cent would switch banks to get better perks.
Worryingly, regardless of age it appears that Britons are still on the whole struggling to build safety nets of emergency savings.
A new Standard Life report shows more than one in five UK adults (21 per cent) would have to take on some form of debt to cover an unexpected expense of just £250.
Research into how much people have saved tends to vary, but around one in four people are estimated to have fewer than £1,000 total in savings. Data from AJ Bell shows women are disproportionately affected in that regard too.
Kevin Mountford, co-founder of Raisin UK, pointed out that data showed many people linked savings to financial well-being.
“Only 35 per cent of people say they feel confident and in control of their savings, while many admit to feeling worried, anxious or frustrated about their financial situation,” he said.
“At the same time, our research shows that managing money is often just one of many competing priorities in people’s daily lives. When time and energy are stretched, it’s easy for savings to slip into the background, even though they can play an important role in overall peace of mind.
“Ultimately, financial well-being isn’t just about how much you have saved. It’s about feeling equipped and confident to make the right decision for your situation so you can make your money go further money. Simple steps like reviewing your savings strategy, understanding how your money is working for you and taking advantage of competitive interest rates can make a meaningful difference to both financial resilience and peace of mind.”