Last week, the Bank of England controversially hinted that we should be spending rather than saving.
This is bound to leave a lot of people, including umbrella company contractors, feeling rather confused, especially when the financial experts have been telling us to save, save, save for our retirement.
The low base rate of 0.5% has meant that savings accounts receive little to no interest and a lot of people have had to dip into their capital to make ends meet during the recession. So why are we are being told to spend more?
Comments from the Deputy Governor of the Bank of England will no doubt cause outrage amongst older savers. He said that they could afford to suffer the current low returns on their savings as a lot of them have benefited from previous huge property price increases. He added that people should not expect to live off the interest generated by their savings.
In related news, research undertaken by uSwitch has discovered that almost one in four people have had charges levied on them because they did not understand the terms and conditions of a financial product they had signed up to. This financial ignorance has already cost Briton’s around £250 million. On top of which, 71% say their lack of financial knowledge is the reason they got into arrears.
It would appear that as the nation gets further in debt, our knowledge of all things financial decreases. Ann Robinson, a director at uSwitch, has called on the coalition to make financial education a national school curriculum subject. If it does, what advice will our young people get? Spend or save? That’s the million dollar question at the moment!
© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: Angel’s and Devil’s Food Cake by Zeusandhera
