Numerous homes fail to hit the record mark. - Bypassing the saving records of numerous households
Germany's households are collectively swimming in wealth, yet a significant portion struggles to save money. Around a quarter of German households, or 23.5%, confessed to having no savings they could readily access in a survey by direct bank ING. However, this figure has been declining since 2013, when it stood at over 30%.
Despite this downward trend, the number of households reporting savings reached an all-time high of 70.7% in the latest survey. Economists at ING Germany deemed this figure as a result of cautious saving in uncertain economic times rather than a reflection of an improved financial situation.
Apprehension about potential hardships is the primary motive for saving, with 71.9% of respondents cherishing their savings for an insurance policy against future obstacles. Vacations or travel and upcoming significant expenses are also common reasons for hoarding cash.
The finances of German households have never looked healthier, with a financial wealth of 9,004 billion euros recorded by the end of 2024 by the Bundesbank. This sum encompasses cash and bank deposits, securities like stocks and funds, and insurance claims, but excludes real estate.
The reasons behind this impressive financial standing are multifaceted. Germany boasts one of the highest savings rates in the euro area, with over 20% of disposable income being allocated for future needs. This savvy savings culture can be attributed to various factors, including an aging population, propensity of consumers to save, and cultural inclination towards financial security.
Additionally, government policies play a pivotal role in shaping Germany's savings landscape. The debt-brake rule, a legislation limiting government deficits, fosters fiscal discipline and encourages saving. Furthermore, Germany's comprehensive social programs, such as generous parental leave policies and subsidized childcare, bolster household finances and enable families to save more, even on modest incomes.
Nonetheless, monetary policy changes and interest rate hikes have the potential to impact savings rates. As the European Central Bank (ECB) adjusts its policy, the impact on German households' savings remains to be seen. However, given the country's strong economic environment and ingrained cultural tendencies favouring savings, it is plausible to expect preservation of these high savings rates.
The Commission, recognizing Germany's savings culture, may consider adopting implementing acts to support this trend, laying down the rules for the application of relevant regulations by 2024. Despite the decline in households with no savings, nearly 71% of respondents continue to prioritize savings, reflecting a deep-rooted savings mindset in Germany. However, this figure could be affected by potential interest rate hikes, as changes in monetary policy could influence savings behavior across the country.
