Brits out of touch when it comes to cost of everyday goods
The average Brit is out of touch about the price of everyday goods, indicating a worrying disconnect when it comes to budgeting and finances.
Free-for-life credit report provider Noddle tested people across the nation on their knowledge of the cost of everyday items in their area. It found that the average Briton could roughly price only three out of 10 such items, from a list including a loaf of bread, a tin of beans and a dozen eggs.
Interestingly, while we struggle with the cost of groceries, we’re much more clued up when it comes to the cost of indulgences and on-the-go items, such as a pint of lager or a takeaway burger – with people coming closest to correctly guessing the average cost of these purchases.
This keenness on convenience, it seems, could also be impacting our budgeting skills, with those who regularly use contactless payments worse at estimating costs for six out of 10 items.
Furthermore, the overarching lack of knowledge when it comes to the price of goods indicates a wider problem with budgeting, with fewer than one in four of us (24%) setting a weekly or monthly budget and four in 10 people (40%) relying on credit cards to pay for groceries on a daily or weekly basis.
The study also revealed where in the country we’re most savvy to the cost of goods, with people from Bristol correctly identifying the prices of six out of 10 items and Londoners only able to identify two.
The item that people fared the worst at guessing the price of was two pints of semi skimmed milk, followed by a tin of baked beans and a dozen eggs. The remaining seven items among the 10 were a white sliced loaf, a tin of tuna, chocolate biscuits, a takeaway burger, a takeaway latte, a pint of lager and a pack of tea bags.
Jacqueline Dewey, Managing Director at Noddle.co.uk said: “It’s really important to keep a close eye on all spending, no matter how big or small. Good money management through regular budgeting is proven to help in the long term, whether you’re well off or trying to save.”
“Having to resort to credit cards or overdrafts to make ends meet can be bad news for your credit score. If you’re not able to keep up with repayments on the credit you use, your credit score could take a hit, meaning it may be harder to get credit when you really need it for bigger items like a car or a mortgage. Everyday spending can start to mount up if you’re not careful, but keeping an eye on your incomings and outgoings is one of the best things you can do for your credit score – and your bank balance!”
Separate your savings: Having all your money in one bank account makes it harder to track and manage. Consider splitting your money into three basic pots: short-term, long-term and emergencies (e.g. boiler break down). Often it’s helpful to aim for specific goals, so think of your long-term savings as your car or holiday fund.
Be credit-savvy: It’s actually good for your credit score to use your credit card a small amount each month – as long as you’re not overspending or missing payments. Keep to within approximately 25% of your credit limit and try to pay off in full each month – this shows you’re responsible with credit. If you find yourself using your credit card for small, every day purchases, it’s time to think about looking at all your incomings and outgoings and sticking to a budget to make sure you’re living within your means
Tracking and budgeting: Establish a reasonable budget and stick to it. Try using a budgeting tool to help. There are free apps like Money Dashboard, as well as this tool from Citizens Advice. Find out your financial personality and get some top tips on saving with this quiz from Noddle.
Pay in cash: Paying by credit and debit card is fast and easy but it can make it difficult to keep a close eye on expenditure, which can lead to nasty shocks at the end of the month. Why not take out your weekly budget in cash and leave the card at home? That way you can know exactly how much you have spent and there’s no way you can exceed your limit.
Small cuts make big savings: A little extra planning and organisation, such as making your lunch at home, cutting down on takeaway coffees or walking instead of public transport can make a huge difference. If you spend £5 on lunch a day, this adds up to about £1000 a year.
Save BEFORE you spend: A good way to start saving is to automate your savings by setting up a monthly direct debit for the day after you get paid. That way you don’t have to worry too much about putting away the money. You could also do this with your monthly bills so you know you can use what’s left over at your leisure.
Credit check up: Keeping a close eye on your credit report at Noddle helps you keep track of your finances. When you check your credit score you get a snapshot of all your outstanding credit, such as mobile phone and energy bills, as well as credit cards, loans and mortgages, so you can see how much you owe and where any problems might arise. Go to noddle.co.uk to sign up.