UK consumers' saving and investing needs and motivations span a diverse spectrum, reflecting varying life stages, financial objectives and risk appetites. They’re also affected by disposable income levels, particularly with the cost-of-living crisis, when it has become more challenging to save as the cost of necessities like food, energy, and housing increases. 

This has led to the rise of models such as the 50-30-20 spending rule, where 50% of income goes towards essential living expenses such as rent, 30% on discretionary spending, and 20% towards savings or paying off debt. 

The products helping UK consumers to save typically fall into one of five categories: instant-access accounts, notice accounts, regular savings accounts, Individual Savings Accounts (ISAs) and fixed-rate bonds.  

Each account type comes with different features and restrictions; for example, fixed-rate bonds typically require the account holder to lock their money away for a specific period, often at least a year, whereas an instant-access account has no minimum term. 

To understand the dynamics and trends of the UK saving and investing market, we commissioned YouGov to survey more than 6,000 UK consumers. In this blog post, we’ll explore the research findings on why people save and invest and the implications for providers. 

People save and invest for various reasons, influenced by personal goals, economic conditions and their disposable income levels and can be grouped into several categories: 

• Saving for a ‘rainy day’: With current cost-of-living pressures and an inflationary environment, many are saving for unexpected events such as redundancy and emergencies and protecting against potential economic downturns.  
• Medium-term and specific goals: Alongside security, consumers save towards particular goals, often with different target dates. These range from saving for a holiday to more medium-term goals such as buying a new car or buying a property. 
• Building long-term wealth: Retirement planning is a major reason for saving and investing, as individuals aim to maintain their standard of living after retirement or leave an inheritance. 

Saving for security is one of the primary reasons many people open a savings account, as it provides a safe place to set aside an emergency fund.  

When asked about priorities for saving and investing, 64% said they were setting money aside in case of an emergency. This was even more important among savers and those planning to save/ invest in the next twelve months. Uncertainty in the economy and the lasting impact of COVID-19 have placed greater importance on having a ‘rainy day fund’. 

Although receiving a leading interest rate was rated as an important factor when choosing a provider, it’s not everyone’s priority. Our research found that lethargy is sometimes stronger than the desire to search for a better deal continually. As one participant in the qualitative research interviews summarised: 

This group are broadly aware that they could be earning more on their money elsewhere but choose to stay put as they believe there would be little benefit to moving. For this group, other factors may be more important than the interest rate when selecting a savings product, such as how easily they can access their funds. 

However, when this lethargy is overcome, it is typically due to external triggers. Consumers specifically cite Martin Lewis’ newsletter, news coverage of interest rate changes, and friends or family pushing them to switch, which makes them reengage and look at new providers.  

For some savers, the primary function of a savings account is to act as a separate pot where they can set aside money they would otherwise be tempted to spend. Customers often want to save money for a specific purpose or goal, such as buying a house or going on holiday. 

This was true for 39% of UK consumers surveyed by YouGov. Meanwhile, seven in ten (71%) plan to spend a proportion of their savings/ investments in the next five years, with holidays/ travel or home improvements the most common reasons. 

The nature of the goal also determines the most appropriate type of account. ISAs, for example, are a popular choice for longer-term commitments like buying a property, as they can provide tax-free interest allowances, as in the case of the government Lifetime ISA. For a shorter-term goal like a holiday, a basic notice or flexible savings account will likely be sufficient to meet their needs. 

As we discussed in our examination of Save Now, Pay Later (SNPL), the behavioural economics and psychology of saving matters, such as the role of categorising money into separate pots for defined purposes, also referred to as ‘mental accounting.’ That term, coined by Richard Thaler in his book Mental accounting matters, suggests that when people assign money for a recognised goal or purpose, they are less likely to use it to pay for something else, even when the money is easily accessible. 

The increased availability of digital tools offering automated roundups and pots responds directly to these needs. They give consumers a sense of accomplishment by getting them to think about why they should be saving, supporting them in setting money aside and tracking progress towards their goals. 

Our research also shows clear demographic distinctions between savers and investors based on gender, age and the amount of assets owned. The generational differences in saving and investing habits reflect life stage priorities, economic realities, and cultural preferences.  

Savers are more likely to be women, older, and with fewer assets, while investors tend to be male, older, and with more assets. Those with a mix of savings and investments continue to be male, middle-aged, and with more assets. 

Women are more likely to be motivated by saving for a rainy day or a significant purchase than men, and younger age groups are more motivated to save for a major purchase or to build wealth than older age groups. 

These differences create several implications for service providers: 

• Supporting life stage priorities: Younger generations tend to focus on short and medium-term goals, while older generations prioritise long-term security. Over time these priorities naturally evolve. 
• Technology and service adoption: Younger generations are leading the charge in adopting fintech platforms, which make investing more accessible and foster interest in riskier options, including meme stocks and emerging digital assets.  
• Economic challenges: Younger generations face affordability crises (housing, education), driving innovative approaches to saving and investing, while older generations lean toward more traditional strategies due to their greater financial security. 
• Cultural values: Social and environmental awareness is more pronounced among younger generations, influencing their investment choices. 

Motivations for saving remain rooted in security and goal setting but are continually shaped by evolving economic conditions, cultural shifts, and technological innovations. Our research also suggests that more people have developed a saving habit thanks to greater competition and time to research different products. 

Understanding these will help providers to tailor their strategies to meet consumers’ diverse and evolving needs.