More than half of people in Scotland are extremely or very confident when it comes to money matters, compared to an average of less than one in four across the rest of the UK.
The latest Disposable Income Index from Scottish Friendly and the Social Market Foundation reveals a stark contrast between the savings and investment habits of people in Scotland and the rest of the UK.
The study of 2,000 consumers, has found that almost four in ten (37%) people in Scotland invest in stocks and shares ISAs compared to less than a fifth (19%) of people across the rest of the UK.
A lack of confidence when it comes to money matters may explain why some people are reluctant to invest. Among those who said they don’t invest in a stocks and shares ISA, two in ten (22%) said it was because they prefer the security of cash ISAs and bank/building society products, whilst 15% said it was due to a lack of understanding.
By contrast, the most common reasons given by people in the UK was that they were afraid of losing money (18%) or they have decided to wait until they have a higher income (18%).
The quarterly report, compiled in conjunction with leading think-tank the Social Market Foundation, shows that the median household in Scotland has £1,052 left each month after paying for absolute essentials of housing, energy, water and a broader basket of goods including groceries, transport, childcare and broadband internet. These goods are required to play a full role in modern society. Money left at the end of the month is available for other key items like clothing, furniture and savings as well as luxuries like holidays.
At a time when the vast majority of cash ISAs, if not all, are offering returns below the current rate of inflation (3%), those people in Scotland that aren’t investing could be losing out on the prospect of potentially greater returns from stocks and shares.
However, encouragingly almost one in ten (9%) people in the country have opened a stocks and shares ISA in the last year compared to a UK average of just 4%.
The findings also reveal that the purpose for saving and investing differ greatly between people in Scotland and the UK as a whole. People in Scotland are more likely to be saving for a special occasion (14%) compared to just (7%) of people in the rest of the UK.
Furthermore, more than a quarter (26%) of people in Scotland are making savings and investments for their retirement, compared to just two in ten (23%) people in the UK.
Calum Bennie, savings expert at Scottish Friendly, said: ‘A lack of confidence when it comes to money matters is very often down to a lack of knowledge or understanding. Although this seems to be an issue for large swathes of people in UK, it’s encouraging that many more Scots feel adept at managing their savings and investments.
‘Taking a long-term view of your finances is incredibly important to building your and your family’s financial future. Although discussing finances with your other half or making arrangements for yourself may not be as exciting as planning your next travel trip, taking the time to talk about money matters, which should include considering your attitude towards stocks and shares investments, could potentially be one of the best investments you’ll make.’
The value of investments can go down as well as up and the value of the original investment is not guaranteed.