Wednesday, July 8, 2009
Category:
Consolidation
According to the Scottish Widows Savings and Investment Report, the current economic environment is having an impact on UK savings patterns.
In fact, 85 percent said that a lack of money is posing a significant barrier to saving. In contrast, just 50 percent said this last year. This is reported to be indicative of stretched finances amid the recession.
Amongst those for whom a lack of money is causing difficulties, daily living costs are proving to be most problematic with 75 percent stating this to be a major obstacle. In comparison, the percentage of individuals who claimed to feel this way in 2008 stood at 67 percent. Personal debt also represents a barrier to saving for 42 percent, compared to 32 percent last year.
Savings expert at Scottish Widows, Anne Young, commented: "The rise in the number of people saying they have no money to save is alarming. It has become more of a priority for people to reduce their current debts and simply get by on a day to day basis rather than saving for their futures. However while paying off debts should still be a priority, in climates like these, it is important to save even a small amount now to get into a saving habit and build up some capital. And we should all regularly review what we are doing as our ability to pay debts and save can change."
31 percent of the individuals who cited a lack of money as a barrier to saving said that taxes are a contributing factor. Of all the individuals surveyed, 50 percent said that they would be more inclined to save, or to commence saving, if there was tax relief on these savings. In addition, 13 percent admitted that struggling to understand savings or investments prevents them from venturing down either of these routes. This lack of understanding was apparent among 19 percent of 18 to 24 year olds, which would appear to indicate that the younger generation requires more guidance on understanding savings.
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Homeowners who have had to rely on credit cards or personal loans to see their way through the recession could consider re-organising their finances with a secured loan. A secured loan for debt
consolidation could leave the borrower with just one monthly repayment as opposed to several. This new, single monthly repayment could even be lower than the sum of total existing monthly repayments potentially providing borrowers with more of their monthly income which could be saved. However, when taking out a secured loan for debt consolidation, it must be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
