Scots paying off debt but not saving

The ‘Financial Face of Britain' report reveals the nation's debt levels, savings and spending habits, and tests Britons overall financial know-how.

The in-depth study, of over 5,000 adults, shows a distinct change in financial behaviour as the credit crunch bites, but whilst spending levels have been curbed, the current financial crisis has hit consumers' appetite to save at a time when a cash reserve is vital.

Declining debt

The report reveals that almost a third of Scots have changed their spending habits in the last six months and spent less to cope with the credit crunch, with almost 40% of under 35s reporting that they have been cutting back.

People have reassessed their finances, with over half (57%) of Scots adults taking action to clear their debt. More than one in three (36%) Scots have increased the amount they pay off each month, with almost a fifth (17%) focusing on paying off more of their debt which is on higher interest rates, such as store cards.

Savings slump

Worryingly, in spite of their canny reputation, 41% of Scots say they are currently saving less than they used to, with 21% saying they have less than £500 in their savings.

Across the UK as a whole, almost two in five (37%) are saving less, particularly the older age group; with 43% of 45-54 year olds currently neglecting their savings. While the younger generation are bucking this trend, with almost a third (32%) of under 25s currently putting more money to one side. But when it comes to long term savings, almost three quarters (74%) of under 25s do not have a pension and are not saving enough to secure their future.

The report also reveals a significant number of UK consumers who do not have any savings, with over 4 million yet to get on the savings ladder. More than one in three do not save on a regular basis, with over half (57%) of these saying this is down to a lack of spare cash.

In addition, over 2 million families in the UK are also failing to put enough money aside to secure their child/children's future and the average family savings balance of £7,542 is considerably lower then the national average (£12,703).

Perhaps unsurprisingly, the under 25s and people from social class DE were the least likely to save. People in the South East are the country's best savers, with people in the area holding savings worth an average of £15,493. The Scots, however, are the poorest savers with an average stash of £9,939 compared to £12,703 in the rest of the country.

Consumers are aware that they need to save but research shows that the majority of consumers are looking for advice and guidance on how to save more and save better.

Mark Cockburn, Retail Network Director, Lloyds TSB Scotland said: "Saving is a must for everyone. With economic conditions set to become more challenging, having the comfort of a savings nest-egg could be a lifeline for many Scots families during these difficult times."

"But it is difficult to put money aside with rising bills and ever increasing household expenses. While everyone understands the good sense in saving, what consumers told us they need is more guidance and advice on how to save more when their finances are being squeezed. To tackle this, we are launching a nationwide programme to help get Britain saving, which is going to be packed full of advice on how to boost your savings balance and make saving a habit."

Making savings a habit

The bank is launching a campaign, ‘Helping Britain to Save' to encourage more people to get into a saving habit and to offer advice on how to keep up this habit even when your finances are being stretched.

The bank has launched a new website,, which is packed full of top tips on how to make the most of your money, as well as a simple and easy to use savings planner, which works out a personalised savings plan to match your circumstance and goals. The site also includes a web video, fronted by Alvin Hall, offering advice and tips on ways to save money in the credit crunch.