What’s better: borrowing money or focusing on saving?

Perhaps down to restrictions on dining out and high street shopping due to the pandemic, the total amount of household savings in the UK has risen since March 2020.  Are we truly a nation of savers?

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Insight from the Bank of England into consumer spending and saving in May 2020, suggested that we may be becoming more cautious about borrowing money, in part due to the ramifications of the coronavirus pandemic, but also because of a general shift in attitudes towards money.

Last April, some of the UK population repaid record amounts of debt racked up on credit cards and personal loans. Many consumers also took advantage of having fewer outgoings due to lockdown restrictions by saving more in 2020.

These trends can be seen in the Bank of England’s April 2020 report, which stated that £7.4bn of consumer credit was repaid during the first full month of strict restrictions on business and social life – double that of the previous month, and the largest net repayment since records began.

Also, the UK government is proposing new regulations where lenders who are part of Britain's £2.7 billion 'buy now, pay later' credit industry will be regulated by the Financial Conduct Authority. This means those lenders will have to carry out affordability checks on customers, and borrowers will be able to escalate their complaint to the Financial Ombudsman Service if things go wrong.

Saving not spending: a growing trend?

According to a report by The Guardian, in January 2020 (just before the pandemic struck), the Bank of England had already recorded that the demand for credit card borrowing was slowing in the UK, with households paying off more credit card debt than they borrowed for the first time in seven years.

At the same time, the UK’s savings ratio (the amount of disposable income that is saved rather than spent in a household) had also increased dramatically. The Office of Budget Responsibility calculated in its 2020 Fiscal Sustainability Report that the household savings ratio might have reached a record high of 28% during the second quarter of 2020 – almost double the previous peak of 15% recorded in 1993.

The idea that the UK is balancing cautious borrowing with enthusiastic saving is backed up by the findings of our latest report, An Exploration of Worth. The research, which we undertook with YouGov in August and September 2020, takes into account the views of over 8,000 UK adults to provide in-depth insight into how we define worth.

If there is one thing this data told us, it’s that many consumers are taking a cautious approach to their finances and are choosing to stay out of the red by taking fewer risks with money. This was reflected in the results of our survey, with two in three respondents agreeing that steering clear of debt is worthwhile.

The financial behaviours most commonly selected as ‘worthwhile’ by those surveyed were:




Maintaining a certain amount in savings in case of an emergency 

Not borrowing money unless absolutely necessary

Ensuring that your money is safe and not at risk 

And 68% of respondents agreed that getting a bargain or saving money is ‘one of the best feelings’.

Save to buy, or borrow?

So, what does this mean when it comes to borrowing? Is it better to save for something and buy it when you have the money, or are some things worth borrowing money for?

According to the responses in our 2020 report, it would seem that much of the British population believe we should only be borrowing money when it’s absolutely necessary, with two thirds (66%) of respondents deeming this as a ‘worthwhile’ financial habit.

Although two in three people say that going into debt must be avoided, our research shows that a quarter feel that it’s inevitable. But despite a general aversion to debt, those surveyed are more likely to agree that it’s worthwhile borrowing money in certain circumstances, such as for big purchases, like buying their own home (at 64%), or buying a car (at 41%).

Given the context in which this research was carried out, perhaps these findings are partly influenced by uncertainty about the future economic environment. Whatever the reason, our research also establishes that having an emergency savings fund is one of the financial behaviours most commonly identified as being ‘worthwhile’ – that’s according to 67% of our survey participants.

Read more about our spending and saving habits in our research report, An Exploration of Worth.

The content in this article is for information only and is not advice. All content in this article was accurate on the date of publication shown above.

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