The dead money economy is worth an eye-watering £721 billion, new research has found, with a staggering amount of cash laying dormant and unused in pensions, bank accounts and ISAs.
With levels of consumer spending expected to be slashed in the coming months as the reality of the falling pound hits home, the UK could be caught between a rock and a hard place with many well-off people sitting on cash they have no intention of using.
Close to a trillion pounds of dead money is been stored because people don’t know what to do with it. Alongside bank accounts and ISAs a third of Brits have up to £250 in cash stored away at home, while one in 10 has over £1,000 tucked away. Additionally one in five has a personal pension containing more than £20,000 – which they no longer pay into.
Lisa Caplan, head of financial advice for Nutmeg, which conducted the study, said: “As this survey shows, people are literally sitting on their money, with no real plans on how to spend it, save it, or invest it.
“While saving money is obviously a sensible thing to do, there are ways of being even cleverer with cash.
“A large amount of people tend to assume that just popping money into the bank makes the most financial sense, but with few accounts offering ways of increasing that sum of money, that might not be the case.
“Sometimes making a few wise decisions with money – such as investing – can really pay off.”
Over 70 per cent of 2,000 people polled said their savings are for a rainy day, and more than half admit they “don’t really know” why they have the money put aside. One in ten has an old Post Office or current account which was opened for them as a child, containing an average of £293.35.
In addition, seven in 10 people own up to three store cards worth just under ninety pounds. And 39 per cent of adults have an old pension pot from a previous job worth more than £16,000 – but the majority have no idea how to access the money.
A third of Brits don’t really know what they have money set aside for, while 92 per cent just like to have money to fall back on should they need it. Of those people who do have plans for their money, 35 per cent regard it as a retirement safety net and the same percentage have money set aside for unexpected bills.
Three in 10 are saving for a holiday, while 18 per cent have a buffer just in case they lose their job. House renovations, a new car and a deposit for a property are other reasons people actively save.
Lisa Caplan added: “You don’t need to be an expert to start investing. And don’t think you need to have a fortune, either. Just start with something, and then keep topping it up over time – even if it’s only a little bit. Something is better than nothing. Your future self will thank you for it.”
