The following is a guest post from Alban, a personal finance writer at Home Loan Finder, where he helps people compare home loans online.
There is nothing like a bit of healthy competition to motivate you to save, so wouldn’t you like to know where you stand in the list of nations who are the best savers? The title of world’s best saver has been fought out by different countries for many years, as tax laws change, government funded retirement plans increase and each country deals with the effects of the Global Financial Crisis in their own way.
Which Countries Have Been the Best at Saving?
Figures of savings rates in English speaking countries to 2006 has shown the top three countries with the most financially responsible savings habits are Canada, Australia and New Zealand. While there was a global recession in 1991 – 1992 which caused a drop in the savings across all English speaking countries listed, the savings in Canada have exceeded the pre-recession levels and are now 23% of GDP. The UK also recovered their savings strongly after the recession, yet Britain, the US and New Zealand have all gotten slack in their savings in the period to 2006.
What are the differences between English speaking countries in savings?
In the early 21stcentury, the governments of Australia, Canada and New Zealand have all aimed to strengthen their budget position, and with greater confidence in their governments, citizens responded to create a strong savings position.
However, in the UK and the US the governments have maintained their budget position which has lead to a weaker long term average and less savings.
Why are English speak countries’ savings declining?
While appearing to be strong, the savings rate of English speaking countries are low among the top 15 OECD countries’ savings rates. In English speaking countries the lower savings rate can be attributed to:
- Fiscal deregulation. Where the financial sector has been deregulated, there is easier access to credit to allow citizens to increase their consumption, even if they can’t afford to. This results in less money saved, and more money going towards repaying those new debts.
- Housing booms. Over the past decade all the English speaking countries have experienced a housing boom which was driven by low inflation and low lending interest rates.
Savings in OECD Countries
In a measure of all countries in the OECD from 1989 to 2006 the top English speaking country ranks 10thbehind the top three savers in the world:
- Italy who saved 16% of their disposable household income.
- Korea who saved 13.8% of their disposable household income.
- France who saved 12% of their disposable household income.
The World’s Best Savers Post-GFC
The Global Financial Crisis in 2007 and 2008 had another significant impact on the savings of individuals and families the world over. Many people are still trying to recover, for example the savings rates in Greece and Portugal are in the negative.
However, from 2007 – 2008 Europeans were able to continue their savings regimes with:
· Switzerland saving 13.9% of their gross disposable income.
· Slovenia saving 12.4% of their gross disposable income.
· Austria saving 11.5% of their gross disposable income.
For Italy and France who previously sat in first and third place in the top 3 saving countries, Italy managed to save just 2.0% and France 5.0% of their gross disposable income.
How to be the Best Saver in Your Country
Regardless of which country you are in and where your country ranked, you can increase your savings and rank well whether your fellow countrymen do or not. To be the best saver in your country:
· Make your money work smarter. Being a successful saver is about regular contributions and willpower in sticking to your budget but you can enhance your savings further by taking advantage of your country’s savings initiatives. For example, does your government offer a dedicated savings account for home buyers? If so you can save more effectively with the help of government contributions. Or is there a government funded or employer funded maternity leave scheme in place? Then you can make use of those payments and keep your savings for other needs. Also make sure you understand the retirement plans and schemes which are offered in your country so you know whether you need to contribute to your retirement and lock your funds away, or whether you can concentrate your savings in a high interest account.
· Understand the costs of living in your country. Find out how the cost of living in your country compares and what the current inflation rate is so you can judge and spot good value. For example, buying a property in the middle of a housing boom is not necessarily good value because prices are artificially inflated. You can also make sure that your wages are rising and in line with inflation, and that your income can cover your cost of living, leaving some money spare for your savings.
· Know your country’s tax rules for your income bracket. No one likes to pay tax and each country has their own way of helping you get around some of those payments. You may be able to use salary sacrifice, where you don’t take a pay increase as you would have to pay more tax, instead your employer makes a purchase on your behalf for a work related item. Alternatively you could look into investment options which allow you to claim the expenses as a tax deduction, and in some countries you can deduct the interest and fees from your home loan.
Strong savings habits and healthy savings balances are more important than ever as people around the world have come to terms with just how fragile their weekly income can be. However, as a whole, the world’s best and worst savers do not have to reflect your savings habits and while savings habits and balances worldwide have taken a hit since the GFC, understanding the savings accounts and incentives which are offered by your government or financial institutions will help you be the world’s best saver.
Article publié pour la première fois le 27/08/2010