Brits more concerned with trip to the pub than saving for a pension
Despite the downturn in the UK economy, Brits are more concerned about having a tenner to take down the pub for a round of drinks than saving for a pension, says research commissioned by Skipton Financial Services.
The ‘Priority Report' quizzed adults on their attitudes and behaviour towards spending and saving in the current economic climate of higher inflation and pay squeezes. It found that:
Once Brits pay for their essentials - like bills, rent and mortgage - the rest of their money is more likely to go on TV subscriptions, meals out and haircuts rather than putting it towards a pension.
Greater importance is being placed on everyday events like having a full tank of petrol rather than looking to the future, a decision which could see their financial futures compromised once the economic situation improves. Having a good social life, being slim and jetting off on a yearly summer holiday were also deemed more important than saving for a new house or planning for retirement.
Treating yourself to meals out, takeaways and heading down the pub emerged higher up in the list of priorities than paying off overdrafts and credit card debts. 20% have felt the squeeze and either cut down or completely ditched takeaways or meals out at restaurants. A quarter have reduced trips to clothes shops, trips to the pub and one in five don't go on as many city breaks or trips away.
One in eight Brits admit they struggle to make ends meet while 32% manage to keep up with their basic outgoings but have very little or nothing left over at the end of the month.
When quizzed on thinking about the distant future, one in five said they worry more about what's happening next week than several years down the line.
Andrew Barker, managing director of Skipton Financial Services, said: ‘'Despite the Consumer Prices Index - the Government's preferred inflation measure - falling now four months in succession from its September high of 5.2%, inflation still remains above pay and has been for the last few years. This is putting a real squeeze on people's take home money and therefore it is not surprising to see many people only looking as far ahead as this week or this month.
‘'The danger of the ‘short-term' approach though is that long-term financial goals get neglected which may hit families even harder in the future. We seem to have great intentions with 29% saying, if they were forced to make cutbacks, they would hypothetically cancel Sky TV compared to only 10% stopping saving or investing money. However, when push comes to shove, people are ditching contributions into their pensions or investments and keeping Sky TV. Only 13% said that they had stopped their Sky TV subscription due to pressure on money compared to 19% who said they had stopped saving or investing any money, with a further 8% stopping making pension contributions.
‘'A worrying 55% said that they had no long-term investments, savings or pension. Pensions are a great example of something which is never too early to start doing, no matter how far you think you are from retirement. For example, if you started paying £200 a month into a pension from the age of 20, you could expect a retirement income of £14,330 a year, based on current annuity rates and assuming the fund grew by seven per cent. But if you delayed paying in for just five years, your retirement income would fall to £10,180. The longer you leave it, the worse it gets because contributions you make when you are younger are worth more as they have longer to grow. Waiting until you're 40 will mean just £5,450 a year in retirement.
"36% admitted that they go into their overdraft regularly, with the average person £388 overdrawn. With many banks making charge for going overdrawn, this is a slippery slope to debt and if are dipping into their overdrafts month-in month-out, then they really need to do a budget plan and see where they can cut down their expenditure.
"Things are tough at the moment and many people are in survival mode right now however, when the economy recovers and pay starts increasing over and above inflation, you need to make sure you have your long-term, as well as your short-term, financial goals covered."
The survey also looked at the main worries Brits face on a day-to-day basis:
Making sure there's enough food in the house (45%)
Making sure there's enough petrol in the car (35%)
Figuring out how to pay the bills (34%)
Keeping on top of the washing and ironing (29%)
Making sure their partner is happy (25%)
Having enough money left over to save or invest (only 24%)
29% blame their finances as the main cause of their worries, while work (17%), family (13%) and health (11%) also get Brits worked up on a regular basis. Yet when it comes to the targets British adults have set themselves for the coming year, just one in eight plan to climb out of their overdraft, one in five will clear their debt and one in ten will start saving for a house deposit. Instead, 40% will focus their efforts on getting their body into shape, a third look forward to their summer holiday and the same number are focussed on improving their social life.