|Save to Win
Speaking today, Yvonne Fovargue MP highlighted the need to make saving more exciting if it is to appeal to those on low incomes:
“We all know instinctively that we should save for a rainy day but for most of us the thought of saving is deadly dull. Where is the thrill, many will say, in putting money away for a financial shock that might never happen?
What we need to do is to make the idea of saving far more attractive and I am more and more convinced that the way to do this is through prizes. The chance of winning a sum of money, however long the odds, could be the key and the model for this is surely the Premium Bond.
“Premium bonds are now over sixty years old and it is not hard to see why they have lasted so long. For the cost of forging a conventional interest payment – which probably wouldn’t buy a cup of coffee for the average saver these days – the holder is given the chance of winning tax-free prizes of up to £1 million.
“That’s a transformative amount of money and surely helps to explain why premium bonds remain so popular, despite very little advertising or promotion. The prize provides the incentive but the real gain for the holder is the fact that they have a fund of money which they can draw on, if and when they need it. And in a real sense that’s transformative too, especially if it means not having to resort to a payday lender or rent to own store when the washing machine breaks down.
“The Government recently agreed to offer matched saving for those on low incomes, up to a maximum of £600 for every £1,200 saved. That is a useful innovation, and will motivate some people to save. But I wonder if it will really make that much difference overall, particularly for those on very low, insecure or erratic incomes.
“I believe that introducing a prize element to saving could be the key. A ‘save to win’ scheme, built around the tried and tested premium bond model, would act as a real incentive to save. Not only would many more people have enough money put away for that ‘rainy day’ we talk so much about, but they would also have some excitement on the way.”