Attitude is everything when it comes to saving

People who don’t save actually want to save, but can’t find a way to do it effectively, according to the research report New Zealanders: Their Attitudes to Saving.

"Income impacts on the amount each of us can save, but not the desire. We spoke with some wealthy spendthrifts and some financially constrained savers. Our impression was that some people have learned to be savers and that savings and debt lessons are learned fairly early in life," says Colmar Brunton researcher Briar Harland.

"Successful savers speak of putting money away before they see it, while less successful savers try and find the money to save after they’ve paid for everything else. One of the more depressing findings was that we believe we’re a nation of poor savers and this tends to become a self-fulfilling prophecy.

"People don’t save for a variety of reasons, including poor knowledge and planning skills, wanting things now, conflicting priorities, paying for children’s education, supporting their parents and living beyond their means. Some people also believe that paying off the mortgage is saving, yet they expect to live in the family home when they retire. The household home certainly seems to be the ‘white elephant’ of savings," she says.

The research found that some people tend to gloss over debt in their minds, often ignoring the impact of credit cards and hire purchases. They are better saving short-term to buy things, often using a debt component as well, rather than saving for the long term and leaving the money untouched.

AMP Managing Director Ross Kent says it is important to understand some of the fundamentals about why people do or don’t save.

"It’s clear that by understanding the psychology of savings behaviour we can do more to encourage people to save than by hammering them with the ‘save more’ message. The other point to take on board from the report is that everyone isn’t the same and we can’t look for a one-size-fits-all solution."

Kent says there are important messages for the financial services industry, including banks, in the research. The industry needs to:

• Help people make informed financial choices by providing good, clear information and appropriate products and services
• Push savings products with as much enthusiasm as it pushes loans and the availability of credit
• Encourage young savers

Kent says the purpose of doing qualitative research was to get depth as well as breadth of knowledge about savings.

"AMP’s SuperWatch research has given us a lot of statistical data about savings. But we wanted to dig underneath the ‘how much’ and ‘how many’ measures to really understand why people do or don’t save and what attitudes are driving their behaviour. It is interesting that this research confirms research AMP has done in the UK, which found that income is not the main driver of savings behaviour and that savings and debt lessons are learned early in life."

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