New research uncovers the UK’s financial habits
Squeezed middle have the most to gain by taking control of their finances
Poorest families rarely ever change suppliers
Almost 6 million* households currently have no savings whatsoever
A five year study from Experian has revealed new insight into the financial attitudes and behaviours of people across Britain. Experian’s Financial Strategy Segments (FSS) tool identifies four key financial trends seen in the UK today, looking at how we spend, save and borrow, both now and in the future.
- Tax on Inertia
In one of the most comprehensive studies of its kind, Experian research found that over 35m* people in Britain may be paying more than they should for inappropriate financial products and utility plans. These people haven’t made the best choices when it comes to planning for their future. Many don’t put enough aside for their pension soon enough, pay too much for bills and fail to switch to the best utility deals. The effect of this is an invisible tax on inertia, which has a cumulative impact over the course of people’s lives.
Savvy Switchers and Digital Devotees
The research also found that those who embrace new digital possibilities are more likely to switch and save. This group consists of 12.8 million people in 5.5 million households, who are likely to be younger and digitally savvy. This means that older consumers, as well as those in rural areas or with poor internet connectivity, are at a disadvantage in terms of the ease of switching. However, connectivity is not the only factor. Those living in London and the South East are most likely to shop around for the best deal and switch providers, while Skegness, Birmingham and Manchester top the locations where residents are least likely to switch and save. (See switching map**).
- Jilted Generation and Helping Hands
An entire generation (in their 20s and 30s) is less well off than the last and families are increasingly coming together to act as one financial unit. Nearly one million* households have received a loan or financial gift from other family members. Experian has found that almost 6 million* households in Britain have no savings, with 423,000 Britons relying on unauthorised overdrafts or payday loans to make ends meet.
- Life Escalator: Age vs. Affluence
Experian analysis shows a series of events and actions that see an individual passing through life and rising in affluence and assets over time. However, for many starting out with the lowest incomes getting on ‘life’s escalator’ is difficult, while more affluent young people are most likely to retire with the largest assets. It is those in the middle who have the greatest chance of changing their financial trajectory by taking control of their finances.
Experian’s Richard Jenkings commented:“Your financial future is certainly impacted by the situation you are in now, but the good news is that practical steps can be made to improve those circumstances in the years ahead. By being proactive and taking the guesswork out of your finances, the savings that households could make is significant.
“A consumer’s financial path is often like a game of Snakes and Ladders. People can move up and slip down, depending on what life throws at them. Using data we can predict probable life-paths through time, however small changes could see consumers beat the crystal ball and improve their financial situation, enjoying more savings and less debt.”
“Whether through a lack of information or because they’re offered fewer alternatives, people often choose the most expensive ways to borrow money, such as payday loans, unauthorised overdrafts and home collected credit loans.Clearly, there’s an opportunity here for financial service providers to help consumers make the most of their financial situation by guiding them to the most appropriate products, and making it simpler to switch. It’s clear from our research that those who stick to old financial behaviors are likely to fare worse in the future than those who change.”
**Regions where people are most/least likely to switch:
Experian has combined the insight available from Financial Strategy Segments and extensive research from YouGov on the financial behavior and attitudes of the UK population. Financial Strategy Segments is built using a wide range of data, including demographics, lifestyle, social, economic, behavioral, product consumption, service and channel preferences, for over 49 million UK adults, with over 500 variables. A 220,000-strong YouGov panel has been added to this which gives answers to over 100,000 questions covering finance, lifestyle and attitudes.