Average savings drop 6% in two years

Will Drysdale, Senior Reporter, Business & Accountancy Daily - Croner-i

Someone earning the average salary in London would never be able to save the amount someone in the top 1% earns in a single year after tax as Brits across the UK struggle to save.

It is unsurprising people struggle to save as living in the capital is hugely more expensive than anywhere else in the country. Those earning the average £30,120 after tax will never be able to save the £113,546 that the top 1% of earners are making after tax, found analysis by Archimedia Accounts.

This is the net take home pay after tax and National Insurance, pretax the salary would exceed £38,000.

Additionally, the average amount people save from their salary dropped by 6.4% to 10.4% in 2024, down from 16.8% just two years ago in 2022, showing how hard the cost of living crisis has been on the ability to save for a rainy day, or for a deposit on a property.

In fact, they will end up in debt as the cost of living for one year in London has risen to £39,061, an annual shortfall of £8,940.

It is not too dissimilar in Manchester either where the average salary after tax is £23,360, although the cost to live in the city is significantly lower than London at £24,856. Despite the difference in cost Mancunians would still never be able to save as much as the top 1% would earn in one year, with Archimedia deeming it ‘unattainable’.

This is the same in Oxford, Bristol and Brighton.

Chris Demetriou, co-founder of Archimedia Accounts said: ‘This research puts into perspective just how challenging it’s become to build significant wealth in the UK, especially with inflation still squeezing household budgets and the cost of living crisis showing no sign of easing.

‘Even under completely unrealistic, no-spending scenarios, the numbers show just how far most people are from the top 1%. And for those living in major cities like London, where everyday expenses are soaring, the pressure can feel overwhelming. It’s not just a financial challenge, it’s an emotional one too, as people juggle rising rents, stagnant wages, and constant economic uncertainty.’

There is hope for some though, but only if you decide to move hundreds of miles away from the capital and cross the border into Scotland as those in Aberdeen have the biggest chance to be able to save the £113,546 the top 1% earn after tax.

However, earning the average salary of £25,708 after tax will take them more than 15 years to squirrel away as Archimedia calculated £7,445 can be saved each year as it costs £18,263 to live there every year. Although this is still unrealistic as most people have several other things they pay for each month besides being able to afford basic necessities.

Derby is the next best place to head to if you’d like to save while earning the average salary, taking a few months longer to accomplish the almost impossible feat. Belfast is next for the easiest place to save £113,546 but it will also take more than 15 years, and some extremely strong willpower to not buy anything bar the essentials over that whole time.