After the tightened purse strings in the wake of the recession, and the accompanying diminished confidence, British consumers are finally starting to feel brave enough to splash the cash once more. However, this doesn't mean that the lessons of the last few years have been forgotten, with savvy savings plans also being put together.
Research undertaken by Octopus Investments found that there has been a resurgence in confident spending on both big-ticket items and smaller treats. Of those questioned, 23% said that they were planning an overseas family holiday, while another 24% were committing themselves to a major home improvement project. Another 9% said that they were thinking about buying a new car, while a further 6% simply wanted to indulge in a shopping spree. New homes were also on many Brits' minds, with 5% contemplating a move.
However, alongside this new willingness to spend is a new cautiousness, with a clear desire to protect against financial problems in the future.
One third of respondents said that the financial crisis had affected their financial plans last year, so now they are determined to create a buffer should the same happen again. When asked about their savings arrangements, an overwhelming 66% of respondents said that they had a plan in place. The most common purpose for saving was to create a rainy day fund (23%), but other popular reasons included saving for a first or second home (13%), creating a safety net in case of redundancy (7%), building up a retirement pot (11%) and putting money aside for school fees (7%).
Perhaps surprisingly, the most committed savers were among the younger generation. The research found that 79% of those aged under 25 were determined to put money aside for a specific financial plan, compared with just 53% of those aged over 55.
Commenting on the research, Simon Rogerson, CEO of Octopus Investments, said: "Our research shows that many people are coming out of the austerity years not wanting to find themselves financially vulnerable again. It's really encouraging to see more people managing the fine balancing act between spending versus savings."
However, he admitted that more still needs to be done to ensure that people make the most of the savings opportunities open to them. "The challenge for the financial services industry… is to encourage more people to explore the benefits of investing, rather than just putting money into a savings account. We need to make financial planning a more rewarding and engaging experience to help more people build up a nest egg for their future and meet their changing financial objectives with a smile on their face."
If you're feeling the confidence that comes with a little extra money in your pocket, it's time to really make your money work hard for you.
A standard savings account is a good place to start, and if you can lock your money away, a fixed rate savings deal is a great way to build up a fund as these accounts typically offer the best rates. A regular savings account may also be an attractive option, particularly if you want to get into the savings habit.
However, if you are feeling a little more adventurous, and you are prepared to take the risks, a stocks & share ISA may be more up your street. These investments have the potential to offer an excellent return, although you must always bear in mind that you can lose money as well as gain it. Check out some of the options here.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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