Younger adults are increasingly abandoning the traditional idea of saving for a "rainy day" in favour of putting money aside for specific financial goals, according to new research from LHV Bank.

A survey of more than 2,000 savers found that 44% of those aged 18-24 believe the concept of rainy day savings is outdated. Similar views were held by 43% of people aged 25-34 and 46% of those aged 35-44, while the idea remained more popular among older generations, with only 28% of over-55s describing it as outdated.

Instead, younger savers are increasingly motivated by defined objectives. Nearly half (48%) of 18-24-year-olds said they are more likely to save for a specific goal, rising to 65% among 25-34-year-olds and 60% of those aged 35-44.

Regionally, Leeds had the highest proportion of goal-focused savers at 61%, compared with 46% in Cardiff.

However, while savers are taking an active approach in putting money aside for specific goals, they may not be quite so proactive in ensuring they are getting a decent return, the bank warned.

While 95% of respondents regularly check their account balances and 69% know exactly where their savings are held, more than half (53%) are not confident they are receiving a competitive interest rate. LHV Bank said this could leave savers waiting longer to reach their financial goals.

The bank is calling on the savings industry to make interest rates more transparent, arguing that teaser rates, temporary bonuses and poorly communicated rate cuts make it difficult for customers to judge whether their accounts remain competitive.

Alex Beavis, interim director of banking at LHV Bank, said: "Saving for a rainy day is increasingly viewed as outdated, particularly among younger people, but that doesn’t mean they have switched off from saving. Quite the opposite - they are instead focusing on saving for specific goals, whether that’s a deposit on a house, a holiday or to start their own business.

“While savers are taking an active approach to saving the money needed to meet those goals, there’s a danger that their efforts are being undermined by mediocre savings rates. Savers are suffering because of a lack of transparency from providers, and it’s making them have to wait longer to achieve their ambitions."

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