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Stop demonising saving
“Keep calm and carry on spending” could be the mantra of the government and, indeed, the British people as a whole. Spend, spend, spend and, whatever you do, don’t save. That is held to be the cure both personally and nationally.
Except it clearly is not.
Recently, the General Secretary of Unite, Len McCluskey said: “The minimum wage should increase because if low-paid workers received an extra £40 a week they’d spend it, not put it into some fund in the Cayman Islands.” In theory, I am all for raising the minimum wage. I believe it is pitifully low in the UK and is not helping people meet the ever-rising cost of living. But I also appreciate that businesses which bear the brunt of it, in particular small and medium-sized ones, will suffer as a result. The difficulties this causes them would, in turn, raise costs for consumers.
However, what really vexes me about McCluskey’s comment is the way in which saving is portrayed as some abstract concept restricted to the filthy rich. Does he not realise that saving is something the less well-off have to do simply to survive?
McCluskey also said that the third week of every month is turning into ‘Wonga Week’, a reference to people resorting to pay-day loan companies to bridge the gap. Surely this is another reason to try and save, to put aside that little bit every month so as not to have to rely on such desperate measures.
Why is saving portrayed as being for the rich?
Why then is saving portrayed as something only the rich do to make themselves richer? Most savers I know live within their budget because they have to; they cut down on luxuries and unnecessary items and set aside a certain amount of money in order to cover the growing cost of living. For many, savings provide the only source of income to live off which, thanks to the Bank of England, it is now impossible to do so.
Earning more is essential in meeting the cost of living. We might want to put some money aside for our children’s future or our emergency fund, for those irritating things that arise out of nowhere. The car might need fixing, the plumber might need to be called out, the children might need new school things. But that extra money needs to be set aside in the first place or it cannot be spent at all.
Pressing for energy bills to be capped too is actually a wise request and makes perfect sense in helping people to budget and meet the cost of living. This would help so many people across the nation. I am sure the energy companies would vehemently disagree but practically we can all deem this a prudent incentive for recovery.
Another example of anti-saving propaganda I have noticed is a trend in women’s magazines that actively extols the virtues of pay-day splurging. We’ve all been there, waiting for the day our wages go into the bank with the eagerness of Billy Bunter anticipating a postal order. We make promises to our friends; we can meet up when we get paid or we can book that holiday when the dosh turns up. But this only works if our wages are good enough in the first place and if the cost does not exceed what is paid in. This is not complex economics, merely common sense.
An article about spending your next wage packet on the latest Louboutin stilettos is far more enticing than an article advising how to invest your next pay packet in a savings account.
But the way these pieces are written is, to me, the height of irresponsibility. Flighty, spendthrift women spending their wages on shoes is all very well; it is, after all, their money to do so as they wish. But if they end up out of pocket as a result and are not putting money aside in savings to meet those unexpected future costs, then the magazines that encourage such behaviour are doing their readers and the nation a disservice. Sensible debt management is, I suppose, not very sexy. An article about spending your next wage packet on the latest Louboutin stilettos is far more enticing than an article advising how to invest your next pay packet in a savings account.
Can savings be sexed up?
How do you sex up savings? I am afraid that is impossible. While savers continue to be penalised, saving seems an irrational and pointless use of funds to the average person. However, self-reliance and independence are traits to be admired and saving instils both these.
McCluskey is right in saying that the government has pushed ordinary people deeper into debt. But when will they see that the measures implemented so far have not worked and that a different attack must be made on the debt crisis and recession?
As Einstein once rightly said, insanity is doing the same thing over and over again and expecting a different result. By this reasoning we are being led by a government and Bank of England who are both insane in penalising savers and mass overspending. It is about time we restored some sanity in managing the crisis and ensuring that we can and will recover at some point in the not too distant future.
A guest blog by Charlotte Sabel. The views expressed are those of the author.