Buy now, think later – “generation spend” exposed

Over 7.5 million consumers are only considering their financial situation in the short term, according to research from Unbiased.co.uk. Even worse, about 3 million Britons make purchases based solely on desirability rather than affordability and describe themselves as “Frivolous Spenders”. This number dwarfs approximately 1.5 million who lead the way in financial awareness by using interest-free credit cards and minimising their borrowing.

Unbiased.co.uk’s fifth annual report highlights the buy now, think later culture currently inherent within Britain and also defines the five different types of spender on the high street. Although half of the population see themselves as “Bargain Spenders” who are always keen to save money on a purchase, the emphasis for most respondents is still heavily on spending, rather than saving their money – the signature trait of “Generation Spend”.

Particularly amongst young people there still exists a refusal to acknowledge the need to budget and save for the long term, as 28% of 16-24 year olds (and one in every four male adults) save only towards large purchases. Further supporting the notion of the younger generation’s preference for spending rather than saving, Unbiased.co.uk’s research reveals that nearly half (48%) of 16-24 year olds’ top priorities, should their spending increase, are clothes and entertainment.

David Elms, Chief Executive of Unbiased.co.uk, commented: “This year’s research into the nation’s propensity to save shows some improvement, but it is disappointing that we still define ourselves as a nation of spenders rather than a nation of savers. It is more worrying to see the attitudes of young people towards the need to Get Saving! Hopefully we will continue to see improvements in saving practices so that by next year it will be possible to define British consumers by their saving as well as by their spending!”

The 5 types of spenders can be defined as: -

Frivolous spenders, who make purchases based on desirability, not affordability. They make up about 3.8 million (9%) of the population, and 1 in 4 of them have no savings whatsoever.

Occasional spenders, who save towards purchases, showing a good propensity for saving, but a lack of looking towards the long term. 24% of men are occasional spenders, as opposed to 16% of women. They make up about 20% of the British adult population.

Bargain spenders, who don’t spend money on expensive items, and prefer to shop around for bargains. This is sensible spending behaviour, but it does not necessarily translate into sensible saving, because over 1 in 10 bargain spenders do not have any savings. More women claim to be bargain spenders than men (56% vs 43%) and on average half the population claims to be one.

Credit spenders, who primarily use their credit cards to spend. This behaviour seems to increase proportionally with age, as only 2% of 16-24 year-olds define themselves as ‘Credit spenders’ but nearly a third (32%) of over-75s say they spend only with their credit card. Credit spenders account for over 4 million people.

Random spenders, who refuse to classify themselves as any of the other category of spender, and represent 10% of the population. Over one fifth (21%) of the over-75 age group responded in this way.

There is some good news in the research, as at least 1.5 million people who use interest-free credit cards to plan their spending actually have no net borrowings. However, despite this good news there are nearly twice as many frivolous spenders as those who are truly starting to Get Saving!

Elms continued: “Unbiased.co.uk’s Get Saving! campaign is about encouraging people to plan ahead, earmark money for necessary spending and save when appropriate in the most sensible and forward-looking fashion. The best way to plan your savings for the long term is to go and see an independent financial adviser, who can do a financial review of your situation, including a budget check and give you whole-of-market advice on all financial products and help you to Get Saving!”

To take control of your spending and borrowing, download your free copy of Unbiased.co.uk’s dedicated guide - Join the Savings Revolution - which looks at how you can budget to save more, and options of where to put any extra money. You can also utilise the online budget planner and access a series of tips on how to Get Saving!