Savings 2016: Mixed fortunes for savers in Europe

The Netherlands is top of the ING Savings Comfort League for 2016, retaining top place from a year earlier. The league is constructed using the share of almost 15,000 people surveyed in 15 countries who say they are comfortable with the amount they have in savings. The question aims to tap into feelings about money. Overall, the savings comfort level is unchanged at the European consumer level, but differences appear when examining results for underlying countries.

Saving more is a “deliberate decision”
Overall, almost two-in-five – or 38% – of people in Europe say they do not have any savings. Of those who do, almost half say the total is €10,000 or less, a figure that would just meet the three-to-six months of take home pay that personal finance wisdom suggests it is prudent for people to have in an easy access emergency fund.

Despite all countries surveyed recording positive economic growth in the year to the end of September 2015, more people in Europe say their savings declined than grew. The finding illustrates how the prosperity – or otherwise – of individuals can differ from that of the overall economy in which they live. Of those who did manage to increase their savings stockpile, more than a third said they made a deliberate decision in the absence of a rise in income.

Italy shines when debt comfort is considered
When asked about borrowing, half of people in Europe say they have personal debt – ranging from a low of 31% in the Netherlands to a high of 75% in Turkey.

Levels of comfort with debt vary between different nationalities. When both savings and debt are taken into account, people in the Netherlands have the most comfortable net financial position. In contrast, Poland has the lowest net comfort score. Low levels of borrowing in Italy mean the country emerges with a higher net comfort position than would be expected if only savings were taken into account.

Age matters when investing
Of nine investment types surveyed, shares emerge as the most widely known. Perhaps more surprising is lower awareness of other products widely considered mainstream, such as mutual funds. Under 25s are much less likely than older people to know what bonds are but the most likely to be aware of impact investing – showing age matters when it comes to familiarity with investment products.

Stark investing differences also emerge between men and women. Men in Europe are more likely than women to say they are familiar with saving and investment products – a finding that holds true for every category in the survey. Moreover, men are also more likely to invest in every category in the survey. Given that investing can build wealth, the different actions of men and women could cause concern.

Overall in Europe, the historically low interest rates that persisted in many places since the start of the global financial crisis in 2007 are influential in the decision to invest – with people seeking greater returns than those offered on cash. Risk and return are also top of mind for investors, particularly for those buying shares. Ethical considerations are most common for peer to peer lending, crowdfunding and impact investing.

Among those who do not invest in some products, the most common reason cited is having enough money. Risk is also a concern, particularly for shares. Most people believe they have the knowledge required.