Two thirds of us claim we can't afford to save more, but we spend at least 54 Billion a year on unnecessary luxuries.
Study reveals cant save, wont save culture fuelling boom in spending and debt
Two thirds of
CANT SAVE?
Despite most adults claiming they cant afford to save more, 73% of us have replaced major items that werent broken in the last year everything from motor vehicles (20% of us) to white goods (25%). The study estimates we spend at least 54 billion a year on such unnecessary luxuries**.
Half of people who say they cant afford to increase their savings (and 53% of those who say they cant save anything) have satellite TV. Nearly one in five maxed out savers are members of a gym or sports club, over half (53%) take multiple holidays each year, and almost half (49%) dine out more than once a month
WONT SAVE?
Most (55%) people wont cut down on unnecessary spending to save more.
- Worse still, 58% of those who say they cant afford to save more would not be prepared to forgo any regular luxuries to increase their saving.
Saving comes way down the list of how people would use 25% more income.
- People are more likely to take another holiday, make home improvements, buy new clothes and entertainments and fund their hobbies than make extra savings. Paying more off debts also comes low down the list of priorities.
IFA Promotion today launches its Get Saving! awareness campaign to encourage people to start budgeting better, and put more money away for their futures. The campaign builds on research carried out last year for IFA Promotion, which first highlighted the UKs lack of joined-up thinking on saving and borrowing. People can find guidance, budgeting tools and information at www.unbiased.co.uk/getsaving or by calling 0800 085 3250 for a copy of IFA Promotions new Join the Saving Revolution guide.
Is thrift a thing of the past? [see page 4 for some example thrift tips]
IFA Promotions study looked into where people have spent large amounts unnecessarily this year, by replacing major items that werent broken. It reveals:
33 billion was spent on motor vehicles last year, 20% of people replaced their car.
1.7 billion went on home entertainment systems, 34% of people replaced theirs.
32% of people replaced furniture, at over 800 on average per household.
25% of people replaced white goods, at 343 on average per household.
Only 8% of people saved up for their biggest purchase. Nearly a quarter (23%) put the purchase on credit, and even more (30%) ate into their savings.
Unnecessary replacement of items in the last year
Q) Which of the following items have you replaced in the past year, that werent broken? | All adults | People who claim they cant afford to save more | People who claim they can't afford to save anything |
| % | % | % |
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Motor vehicle | 20 | 16 | 19 |
Home entertainment items | 34 | 31 | 34 |
Furniture/home furnishings | 32 | 31 | 29 |
Computer/laptop | 12 | 11 | 11 |
Mobile phone | 31 | 25 | 27 |
Luxury clothing/accessories | 37 | 34 | 33 |
White goods | 25 | 23 | 23 |
Elms continues, One in five people who claim they cant afford to save replaced a perfectly serviceable car this year alone, and most either borrowed or raided their savings to do so incredibly only 4% saved up for the car. This is just one example of the kind of regular consumption which leaves us with little to show for our money in the long run. In contrast making monthly savings is a way of rewarding yourself regularly.
Consumption gone crazy?
The study also looked at whether people are able to resist objects of desire that they cannot afford, and if not, how they would go about paying for them. It found that:
17% would borrow to buy the item. 27% of these borrow-to-buys are people who previously stated they could not afford to save anything at all.
Nearly one in eight (12%) would erode their savings to buy the item. 54% of these say they are currently unable to save more or at all.
Some rays of hope for saving
Whilst many of the studys findings give cause for concern, IFA Promotion believes there is some evidence that the UK has not entirely forgotten the importance of saving:
64% of people prefer to see themselves as savers, rather than borrowers
More than half (57%) of 18-24 year olds say they would be prepared to give up some unnecessary spending to save more for the long term. 42% of this age group say they are in a position to save more, against an average of 32%.
15% of people who say they could save more intend to in future, and 16% say they are paying off debts first
Elms concludes, Theres no doubt that the Government and the financial industry can provide vital incentives to save, and further action may be required to tackle the countrys savings gap. But its also down to individuals to rediscover the dying art of budgeting. We cant go on spending like theres no tomorrow, because there are lots of them, and they wont be much fun without the means to enjoy them.
Call 0800 085 3250 or visit www.unbiased.co.uk/getsaving for IFA Promotions new Join the Saving Revolution guide, looking at why we need to save, and how you can budget to save more, and options for where to put any extra money. You can also obtain details of local independent financial advisers to talk through the most suitable savings options for you.
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For expert comment or case studies from over 170 media-friendly IFAs, journalists should call IFA Promotions Media Services hotline on 020 7294 3682 or search online in Media Services at www.unbiased.co.uk
For further information call
IFA Promotion Lansons Communications
020 7833 3131 020 7294 3641 / 77 or lizw@lansons.com
* Is thrift a thing of the past? report was produced for IFA Promotion by RAKM, and is partly based on an analysis of Inland Revenue, ONS, DWP Family Resource survey, Bank of England and ABI along with a specially-commissioned face-to-face consumer survey of 2,000 UK adults (16+), conducted by BMRB during August 2003. With detailed queries on the report, call
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Motor vehicle |
| Average annual household expenditure | Average annual personal expenditure | Annual household expenditure | Percentage of spending deemed unnecessary | Estimated unnecessary annual expenditure |
| m | % | m | ||
Motor vehicle | 1,342 | 671 | 33,384 | 25 | 8,346 |
Home entertainment | 889 | 370 | 1,733 | 58 | 998 |
Home furnishings | 811 | 811 | 389 | 66 | 258 |
Holidays | 858 | 358 | 178 | 100 | 178 |
Mobile phone | 187 | 78 | 90 | 100 | 90 |
Clothing/accessories | 1,347 | 674 | 33,436 | 41 | 13,683 |
White goods | 343 | 343 | 166 | 50 | 83 |
Eating out | 1,529 | 637 | 38,012 | 53 | 20,146 |
Software | 291 | 121 | 7,280 | 72 | 5,252 |
Gambling | 192 | 96 | 4,732 |