Yoyo Brits in a spin when it comes to money
Almost half (47%) of Brits are up and down like a yoyo when it comes to money making savvy savings one moment to justify overspending the next, according to research from, Standard Life by YouGov Plc.
The survey from pensions and investment specialists Standard Life finds that almost half of people in Great Britain take a 5:2 diet approach to their personal finances – they adopt shrewd money saving tactics simply to offset overspending sprees.
People most likely to take this yoyo approach are those aged 55 or over (51%) and 18-24 year olds (48%), while 25-34 year olds are least likely but 43% of them still yoyo about. Notably, those with most control of their spending and saving are adults with three or more children living in their household (41%).
Looking across Britain, people in Wales (57%) and the West Midlands (53%) are the most likely to ‘yoyo’ about with their money, while people in the North East are the least likely – but 42% of them still manage their finances like a 5:2 dieter.
Julie Hutchison, Personal Finance Expert at Standard Life said: “Knowing that so many Brits yoyo about when it comes to money is slightly worrying. But it’s also encouraging to know that these same people can be savvy cost cutters when they want to be. They just need to channel that smart behaviour so they build up a savings pot, rather than just bankroll a spending spree. Then they can enjoy controlled spending and won’t feel guilty or anxious. Families certainly seem to be doing their best to avoid the financial uncertainty of the up and down of the yoyo approach.
“Those who aren’t building-up savings are taking a big risk by leaving their financial future to chance. It’s like pinning everything on winning the lottery. That’s why we’ve developed a new quiz for people to uncover their money personality and see how they tend to behave. It’s a fun way to find out more and also get some tips to help, based on their individual personality.”
People can find Standard Life’s quiz – “Which type of lottery winner are you?” – by visiting bit.ly/LotteryQuiz. While winning the lottery is an extraordinary event, people tend to remain true to self if they do become winners. Standard Life’s research shows that on winning the lottery, two in five (38%) people would start planning a new lifestyle, but would make sure it lasted a lifetime, whereas just 3% would blow it on the biggest shopping spree of their lives. So even though many Brits yoyo about with their money, few want to risk blowing it all.
Standard Life is using insight into people’s behaviours to provide tailored support to help them not just “make savings” but to “build savings” too, so they are “saving smart” all round.
Recognising the challenge of “Saving Smart” for long-term savings, such as in a pension or ISA is important; here are top tips from Standard Life:
Interest rates are low and inflation is currently on the rise, so it’s tricky to find a cash savings option that will keep pace with inflation right now, let alone beat it. So money sitting in a savings account is likely to be losing real value. So think about checking the rates you are getting on your savings and if you’re not already doing so, you might consider alternative a tax efficient option, such as a Stocks and Shares ISAs. You might want to speak to an expert for guidance on this and much will depend on how much risk you feel able to take.
If you’re employed, you might be automatically enrolled into a workplace pension. If you’re tempted to opt-out of this, think very carefully before missing out on “free money” from your employer’s contributions and generous tax benefits form the government too.
If you are self-employed, then you need to make your own pension arrangements. That’s something to factor into your plans when starting your own business.
If you have several different pensions, you might want to consider bringing them together into one. It could make it all a lot easier, so you only have to deal with one company and can see more clearly how your pension is doing – it will be less paperwork too. However it’s not right for everyone, and doesn’t guarantee a better pension. For example, you could be giving up valuable guarantees.
The earlier you start investing for your future, the more chance your money has to grow. If you are concerned about locking your money into a pension until you reach age 55, then tax efficient ISAs could be considered as an alternative in the meantime.
Use as much of your ISA allowance as possible each tax year. Between 6 April and 1 July 2014, there are temporary limits of £5,940 for cash and £11,880 for Stocks and Shares ISA. After this the new ISA (NISA) rules apply and you will have the chance of greater tax efficient growth over the longer term by being able to invest up to £15,000 in 2014/15 tax year.
Always hold some money in cash to cover your outgoings (such as your rent, mortgage, food and utilities) and in case of emergencies, before looking to invest for the longer term. But make sure you are getting the best interest rate on your cash. And be wary of holding lots more money in cash than you need to, when you could be investing some of it instead and giving it the potential for long term growth in the stock market.
If you are dipping your toe in the stock market for the first time, then you may want to seek guidance when it comes to choosing which funds to invest in – the Money Advice Service is a good starting point
The value of any investment can go up or down and may be less than was paid in. Tax rules and legislation can change and the information given here is based on our understanding of law and current HM Revenue & Customs practice.