The financial management future is looking bright for consumers in the UK with the Institute for Fiscal Studies (IFS) forecasting that real wages are set to increase for the first time in five years in 2014. If realized, this should mean that consumers have more income at their disposal to meet everyday expenses.
But while income levels may be set for a rise, consumers may struggle to adjust from the some of the spending habits they have adopted since the double-dip recession. This includes making cutbacks on luxury spending and putting more money aside for emergency costs.
Photo by: reynermedia
However, when it comes to the overall picture of how Brits are currently managing their finances it seems that both saving and splurging seem to be taking place side by side. While one set of research shows that we are keen to do all we can to stay in our monthly budgets, another reveals that we are continuing to put some of our purchases on credit.
Financial Management: A look at a number of sides in Brits’ current money equation
We are using tactics to save money
We all know that savings are a lifeline when times get tough, so it comes as no surprise to see Brit’s are utilising a number of savings tactics to help them avoid going into the red. Recent research has shown that some of the nation’s favourite spending habits include saving on gas and electricity (60%), spending less on new clothes (58%), reducing the number of takeaway meals (57%) and making the switch to lower cost supermarket brands (55%). All these small changes could add up to big results for today’s consumers.
We are living beyond our means, but there is some hope
Despite the use of the above savings tactics being a step in the right direction Brits are still overspending. And this is not just by a couple of pounds. Half of Brits in a recent survey admitted to overspending by a staggering £150 each month, with one in five arguing that they are not prepared to make changes to their lifestyle to remedy this situation.
Further figures from the research showed just how far from cash-conscious some consumers are, with 42% admitting that they see overdrafts and credit cards as an extension of their bank balance.
Though this doesn’t make for great reading, thankfully 60% of those questioned admitted that they need to do more to stay in the black.
We are still in debt, but we are paying back more of it
In seems that the gap between thinking about or finances and taking action is still wide, with figures showing that the typical UK adult now owes £28,599. However, it seems that we have become more prudent when it comes to repaying our debts. Consumers turn to a number of lending options to act as a financial stop gap such as the short term lending options offered by Loan My Motor, overdrafts, personal loans and credit cards. And with the last option the latest data from UK Card Association has shown that Brits have slashed their credit card debt by 13% since 2008.
So it seems that Brits do have the capacity to rein in their spending, but it is a question of putting this into practice.