Britons Prefer to Keep Their Cash in a Mattress

September 2010
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Published in December 21st, 2008

According to MGM Advantage, approximately five percent of us now prefer to keep our cash in the home rather than put it in a savings account.

The company’s recent Retirement Nation Study reveals that confidence in high street banks and building societies has fallen. This is especially true in the north eastern region of Britain where the demise of Northern Rock has hit particularly hard although it is in Plymouth where trust in these institutions was revealed to be the lowest in the country. This trend toward stashing cash in the home is equally true for both rich and poor families, the company suggested. 18 per cent of people battling with personal loan repayments and other types of debt said they would prefer to put money under the mattress rather than to trust it to a financial body. The same is true for the very wealthy, 25 per cent of respondents with assets of over one million pounds said they too would hold onto their money.

Notwithstanding these facts, for most of us, savings accounts remain the number one methods of investing. Indeed 55 per cent of respondents said they would opt for this type of saving as a means of securing their future finances. Pensions funds ranked as second favourite with 17 per cent of people choosing this vehicle, while just over one in ten of us rely on the UK property market. Unsurprisingly in the current economic climate only six per cent of respondents said they would opt for stock market investments.

The report also highlighted a disparity between men and women in terms of the type of savings made. 60 per cent of women have a savings account, compared to just under half of the male population. Pensioners are also said to be keen on this type of investment with almost 60 per cent of over-65’s claiming they owned an account. When it comes to trusting financial institutions overall though, it was the younger generation who came out on top. Two thirds of those aged 16 to 24 said they owned a savings account.

According to MGM Advantage, some consumers are in fact unaware of the most efficient methods of saving money. Almost a fifth of participants said they couldn’t understand key financial terms like individual savings accounts, defined-benefit/final salary schemes, equity release mortgages, pension credits, stakeholder pensions, annuities and indeed independent financial advisory (IFA) services.

It seems that only 10 per cent of us are prepared to invest in a mutual although this may be down to ignorance rather than a question of trust and interestingly, double the number of those who use an IFA, as opposed to those who don’t, said they would go to a mutual. However, since less than a third of respondents said they understood the term “mutual” it remains at the bottom end of the list of financial terms that are reportedly understood by one third or so of the population. According to the report, these include “pension credit”, “stakeholder pension”, “defined -benefit final salary scheme”, “annuity” and “FSA”.

A study by Saga earlier this year, claimed that many people were reluctant to talk about their financial situation even with family and friends. Whilst 38 per cent will discuss their pension provision, only 14 per cent will happily discuss the amount of credit card or personal loan debt they have accrued.

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