More than half (56%) of UK adults polled in a recent survey admit that they don’t have a monthly finance budget that they stick to.
Speaking to 2,000 UK adults, the survey by Baines & Ernst captured a snapshot of the UK’s financial management issues ahead of the end of the financial year.
The figures released showed startling results, with 17% of those polled admitting that they do not have any savings at all, while 10% confess to relying on their overdraft every month.
A third of respondents have between £1,000 and £6,000 savings in place, but 1 in 7 have debt that equates to between £1,000 and £10,000. A further 1 in 14 have current debts of over £10,000, with those in the 35-44 age group suffering the most with debt (9%) and 25-34 year olds following close behind.
Worryingly there are a number of people who try to avoid or ignore their financial problems. In fact 12% of 18-24 year olds do not even check their bank account in fear that there is a lower balance than they presumed, compared to only 4% of those 55 and over. Further studies from the past few years have confirmed a growing dependence on overdrafts, with one study stating almost a third of adults in the UK rely on their overdraft*. Experts are now warning of a large number of the population becoming too ‘comfortable with their debt’.
Joint Managing Director from financial solutions company Baines and Ernst, ShazSulaman said “As the cost of living continues to rise, an alarming number of people are turning to additional forms of credit to pay for everyday essentials. While this can be a short-term solution for those who desperately need additional funds, the long terms effects can be much harder to deal with if the amount borrowed cannot be repaid on time. Debts can easily spiral out of control and can lead to bigger financial problems that become much harder to manage.”
A further generational difference that has come to light from the research is that the majority of those over 55 feel it’s the responsibility of parents to educate their children on managing finances, when the majority of 18-24 years (38%) feel this responsibility lies with the education system.
With the soaring cost of living leaving many people feeling like they’re living one step from poverty, Baines and Ernst tried to clarify where Britain believes the majority of their expenditure goes, and 1 in 3 feel it is on household bills, whereas 1 in 7 believe the majority of their wage goes on food shopping.
Sulaman went on to advise on how to avoid a downward financial spiral; “The most effective way to stay on top of your finances is to budget. It is a simple solution that can really help you maintain control of your money. Go through your finances thoroughly – creating a full income and expenditure overview of your household budget. Once you have this you will be able to recognise areas where you can streamline your finances and set realistic budgets. You could even identify ways to cut spending and save money.”