UK households have been issued a stark warning about hoarding cash, as personal finance experts express concern that this behavior may be causing many to become poorer over time. Recent analysis reveals that the UK ranks among the least financially disciplined countries, despite its high levels of household wealth.
Investment platform BrokerChooser’s research compared saving and investing habits across developed nations and found the UK lagging on key financial measures. On average, UK households save just 4.74% of their income, placing the country near the bottom globally. Moreover, only 4.48% of household financial assets are held in investment funds, indicating a preference for low-yield savings or cash.
UK households possess average financial assets estimated at $140,974 (£105,731), the highest among the bottom ten countries for financial discipline. Unfortunately, much of this wealth remains tied up in cash, property, or low-return savings products instead of being invested to generate long-term growth.
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Separate research by Scottish Friendly reveals that 42% of British adults keep all their wealth in cash, with an additional 15% holding most of their assets in cash, even though 72% acknowledge this can erode their wealth over time. The primary reasons cited for favoring cash include quick access to money (39%), fear of investment losses (38%), and lack of trust in financial markets (34%).
These findings pose a significant challenge for the UK government, which aims to encourage more people to invest. Increased investment is not only vital for improving personal returns but also crucial for supporting British growth companies.
Notably, concerns about losses are more prevalent among women (44%) compared to men (33%), while men report slightly higher distrust in markets (35% compared to 33% of women). Quick access to money is equally important for both, with 40% of men and 38% of women citing it as a reason to hold cash.
The research also highlights generational differences. Gen Z leads in valuing quick access to cash (54%), followed by Baby Boomers (41%), Gen X (39%), and Millennials (35%). However, Baby Boomers show the greatest distrust in markets (40%) compared to Gen X (33%), Millennials (24%), and Gen Z (23%).
Kevin Brown, savings specialist at Scottish Friendly, commented on the challenge savers face in shifting from cash to investment despite understanding the risks. “People largely understand the dangers of keeping their savings in cash long term, but many cannot make the leap to invest,” he said. He warns that by hoarding cash, UK households are inadvertently reducing their wealth over time.