Study reveals ‘can’t save, won’t save’ culture fuelling boom in spending and debt
Two thirds of
CAN’T SAVE?
§ Despite most adults claiming they can’t afford to save more, 73% of us have replaced major items that weren’t 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 can’t afford to increase their savings (and 53% of those who say they can’t 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
WON’T SAVE?
§ Most (55%) people won’t cut down on unnecessary spending to save more.
- Worse still, 58% of those who say they can’t 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 UK’s 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 Promotion’s new ‘Join the Saving Revolution’ guide.
Is thrift a thing of the past? [see page 4 for some example thrift tips]
IFA Promotion’s study looked into where people have spent large amounts unnecessarily this year, by replacing major items that weren’t 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…
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Q) Which of the following items have you replaced in the past year, that weren’t broken? |
All adults |
People who claim they can’t afford to save more |
People who claim they can't afford to save anything |
|
|
% |
% |
% |
|
|
|
|
|
|
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 can’t 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 study’s 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, “There’s no doubt that the Government and the financial industry can provide vital incentives to save, and further action may be required to tackle the country’s savings gap. But it’s also down to individuals to rediscover the dying art of budgeting. We can’t go on spending like there’s no tomorrow, because there are lots of them, and they won’t be much fun without the means to enjoy them.”
Call 0800 085 3250 or visit www.unbiased.co.uk/getsaving for IFA Promotion’s 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.
-ends-
For expert comment or case studies from over 170 media-friendly IFAs, journalists should call IFA Promotion’s 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 |
Source: ONS, Family Spending 2002/RAKM for IFA Promotion
SOME SIMPLE THRIFT TIPS TO BOOST YOUR SAVING POTENTIAL
1) Buying a coffee on the way to work each morning can cost you over £360 a year – a wake up call for anyone.
2) A second or third family holiday each year can really rack up. And a retirement without any money for holidays would be more of a wash-out.
3) Trying to hit the lottery jackpots every week can cost you over £100 a year. And how many friends can you name who have won more than that?
4) Gym membership can cost £400-£1000 per year. Do you really use it? A run in the park is free.
5) Buying a sandwich from your local shop is more than double the cost of making your own – and you can use more filling!
6) A satellite TV subscription can cost £500 a year. What did you do before you had it?
7) We all like adding to our music collections, but at £14 a CD, do you listen to half the music you’ve already got?
8) Making home improvements is becoming a more popular pastime than gardening – and usually a lot more expensive!
9) Going for a post-work glass of wine or beer just two nights a week can cost you over £260 a year.
10) With plastic in your pocket it’s hard to resist those impulse buys. But do you really need another designer top or new mobile phone?
11) Most of us either give or throw items away that we have replaced. Why not sell them through the classified ads?
1. Independent Financial Adviser Promotion
IFA Promotion was established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents over 10,000 firms of independent financial advisers across the
IFA Promotion’s believes Independent financial advice should be:
· Affordable. The option to take independent financial advice should be available, by right, to all - not just the wealthiest in society.
· Convenient. IFAs should be available in the location of the consumer’s choice, wherever they live in the
· Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.
2. Independent Financial Adviser Promotion’s sponsors
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AXA |
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Bright Grey |
Old Mutual Asset Managers |
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BUPA |
Prudential |
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Scottish Equitable Plc |
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Children’s Mutual |
Scottish Life |
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Clerical Medical Investment Group |
Scottish Mutual Assurance Plc |
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Eagle Star |
Scottish Provident |
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Friends Provident |
Scottish Widows Plc |
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GE Life |
Selestia |
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INVESCO Fund Managers Ltd |
Standard Life Assurance Company |
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Legal & General |
Skandia UK Group |
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Mortgage Express |
Winterthur Life UK Ltd |
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National Savings & Investments |
Zurich Life Assurance Company |
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