Debtors need to be educated about saving, expert says

Despite the fact that Brits appear to have reformed their saving habits – with figures from the Office for National Statistics revealing that the household savings ratio has risen to 5.6 per cent – more must be done to educate them on the best ways to save, the assistant editor of a money website has said.

Simon Lambert from This Is Money noted that short-term saving will not support the economic recovery, but a change in attitudes “from the spendaholic bingeing of recent years, to making sure we put more aside in the good times” could offer far greater benefits.

He remarked that the nation needs to be re-educated in how to move their borrowing around and recommended people avoid bank and investment company schemes, which he predicts will increase in prevalence over the next few years.

Earlier this month, economist Howard Archer stated that the increased levels of debt are forcing people to try and improve the state of their finances.

Prepaid cards are being used by many consumers during the recession to help them educate themselves and monitor their spending habits.

This type of card is gaining popularity due to the fact users cannot go into overdrafts and therefore do not incur any crippling bank charges.

The beginning of the year saw the launch of ClearCash, a prepaid MasterCard which offer users the unique BudgetMaster tool, enabling consumers to categorise their spending on their card.

It also gives them the option of saving a portion of their income, as well as monitoring exactly where, when and how they spend their money.

By Sarah Adie