British households have been issued a stark warning against "hoarding" their money in cash, as new analysis suggests the practice is actively making millions of people poorer over the long term.
UK Ranks Low on Global Financial Discipline
A study by the investment platform BrokerChooser has placed the UK among the world's least financially disciplined nations, despite relatively high levels of household wealth. The research, which compared developed countries, found the UK performs poorly on crucial measures of saving and investing.
On average, UK households save just 4.74% of their income, a figure that positions the country near the bottom of the global rankings. Furthermore, only 4.48% of household financial assets are held in investment funds, indicating a strong preference for more accessible, but lower-growth, options.
Wealth Held in Cash, Not Investments
Paradoxically, UK households hold average financial assets worth an estimated £105,731 ($140,974) – the highest level found in the bottom ten countries for financial discipline. The analysis suggests that a significant portion of this wealth is tied up in cash, property, or low-yield savings accounts instead of being invested for potential long-term growth.
This finding is supported by separate research commissioned by the mutual Scottish Friendly. It reveals that 42% of British adults keep all their wealth in cash, with a further 15% holding most of it as cash. This persists even though 72% acknowledge that this strategy could reduce their wealth over time due to inflation eroding its value.
Fear and Distrust Drive Cash Reliance
The research delved into the reasons behind this widespread cash hoarding. The top motivations cited by respondents were:
- The need for quick access to money (39%).
- Fear of making losses (38%).
- A lack of trust in financial markets (34%).
Concern about losses was notably higher among women (44%) compared to men (33%). Meanwhile, men were slightly more likely to cite distrust in markets (35% vs 33% of women). The desire for quick access was almost equally important for both genders.
A pronounced generational divide also emerged. Gen Z (54%) was most likely to prioritise quick access to cash, followed by Baby Boomers (41%). However, Baby Boomers (40%) displayed far greater distrust of markets than younger generations like Millennials (24%) and Gen Z (23%).
Experts Warn of Self-Inflicted Financial Decline
The collective findings present a clear challenge for the Government, which has ambitions to encourage more investment to both boost personal returns and support growing British companies.
Kevin Brown, a savings specialist at Scottish Friendly, explained the psychological barrier many face. "People in the main understand the risks of keeping their savings in cash over the long term but they nonetheless cannot make the leap to invest," he said. "The result is they are making themselves poorer."
This expert warning underscores the central message: by persistently choosing cash over considered investment, a vast number of UK households are inadvertently compromising their own long-term financial security.
