Monday, March 7, 2011
Category:
Consolidation
According to research commissioned by moneysupermarket.com, equivalent to 23 percent of Brits with savings are using this money to fund ‘everyday household bills and spending’. This comes at a time when the cost of living is rising along with levels of unemployment.
The comparison website’s research has also revealed that the equivalent of nearly 16 million Brits have no money saved up whatsoever. It was also found that 21 percent of respondents are utilising their savings to finance ‘luxury items’ such as holidays. This is thought to indicate that consumers view their savings as a means of paying for ‘non essential items’ as opposed to a ‘rainy day fund’.
When it comes to the generation divide, findings have shown that 39 percent of 18 to 34 year olds have no money set aside, whilst this is the case for just 20 percent of those aged 55 and over.
Head of banking at moneysupermarket.com, Kevin Mountford, commented: "Many Brits are clearly feeling the pinch more than ever and are being forced to use their savings to pay for everyday household living. With the cost of living soaring it is difficult to balance the books, and many people will be tempted to dip into their savings, however, it is important to have some savings put aside in case your circumstances change suddenly. The common theory is that it's best to have at least three months' of outgoings put aside in case you were to lose your job or be unable to work for an extended period of time. However, in these tougher times, this may not be possible for everyone. There are some small steps though, that you can take to make some savings on the cost of living, which could then allow you to put away a small amount each week or month.
"Anyone who currently has no savings at all should take control of their finances and review their outgoings and try where possible to put away even just a few pounds a week - every penny counts. Over time this will build up and help to pay for unexpected bills. For example, checking through existing direct debits and making sure they are still valid and cancelling any unwanted payments may free up some cash.
"It is encouraging to see that more people are avoiding putting expensive luxuries, such as holidays, on credit. Although it can seem a hassle saving for a large purchase, in many cases it is better than funding through expensive forms of credit - perhaps we are starting to see Brits moving back to the save now, buy later habit previous generations adopted. Anyone putting money aside should keep and eye on the interest being offered and if necessary, move to a better deal so their money works harder for them. If you are a UK taxpayer, using your annual tax fee ISA allowance is also a no brainer."
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Homeowners who would like to set money aside on a regular basis, but are unable to due to juggling several expensive debt repayments each month, could consider tying these debts up into one manageable monthly repayment with a secured loan. One of many finance options available, a secured loan for
consolidation could allow borrowers to reduce their current out goings, thereby freeing up extra money each month. This extra money could potentially be set aside in a savings account if desired. However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
