Brits more upbeat about their finances
When it comes to personal finances, it seems many Brits may be feeling slightly more upbeat. A recent study has shown that UK consumer confidence climbed to its highest level in four years, mainly due to low inflation but also rising pay packets.
The study of 3,000 households was conducted by Deloitte and is explained in detail in this Telegraph article. It highlighted areas such as opportunities, career progression and perceptions about debt.
Mr Stewart from Deloitte commented on the study, “Rising real incomes, more borrowing and lower levels of saving give UK consumers the wherewithal to keep spending. Household expenditure is set to remain the engine of UK growth over the next year.”
So what does this mean from Brits across the country? It is certainly encouraging.
In recent years we have seen many households struggle to make ends meet due to benefit cuts, rising utility bills and poor debt management.
One issue has been with people simply not understanding debt, taking out loans irresponsibly or without completely understanding them. Payday loan website Wonga SA says that in their recent ‘financial literacy’ survey, 83.7% of people said they would take out credit to buy a house whilst 58.6% of those surveyed said they would take out credit for university education. Also, 5% would borrow for a holiday and nearly 5% would take out a loan for gadgets, technology or fashion. Wonga suggests that before taking out any loan, you should consider whether it is ‘good’ or ‘bad.’ They suggest three questions:
1. What’s it for?
2. Can you afford it?
3. What will it cost you?
They suggest that by asking these questions and being a responsible borrower, you can avoid bad debt and encourage higher levels of consumer confidence and therefore reap the benefits of smarter money literacy.
However, in thisismoney.co.uk last year, we discovered that Brits aren’t so confident when it comes to saving money. The article suggested that the amount UK households can save slips 10% in four years, compared to, for example, Australians, who have £5k more available to save each year. The study predicted that Brits will be able to save even less in the coming years and by 2018 will be able to rely on just £3,000 of ‘potential savings’ after household expenses.
Looking at both stories, we may draw conclusions that Brits are on the up when it comes to financial literacy, understanding money and managing their money properly. After household expenses are covered, credit cards are repaid and so on, perhaps saving money is on the lower end of the list of money priorities.
However, it does pay to consider your savings and put some money aside. Even a small amount a month – £20, £50 or £100 if you can stretch to it, would help households if they reach a sticky situation, have an unexpected bill or simply need to call upon extra cash.
The moral of the story? Stay savvy when it comes to your money. Know what you’re borrowing, what you’re incomings and outgoings are, and save if you can.