Many Britons ‘spending like the recession never happened’

23 November, 2014 (03:56) | personal finance investment | By: admin

Many consumers are still spending as if it’s 2007, an expert has said.

Many consumers in the UK are continuing to live in a buy-now-pay-later culture through personal finance options such as credit cards, despite the effects of the global economic downturn.

That is according to Kim Stephenson, founder of online resource Taming the Pound and financial psychologist, who believes there are some people who have seemingly ignored the fact that the recession even happened as they have failed to adjust their outgoings.

Mr Stephenson explained that a lot of Britons are continuing to spend as if it is still 2007, a trend he suggested is concerning for their long-term financial prospects.

“People are assuming that you can keep borrowing because your house will go up in value and your income will keep rising, so you’ll just pay off all the debts in the future when you sell the house,” he noted.

These comments came after the publication of the latest quarterly Saving Britain study by BM Savings last week (May 14th), which established that 33 per cent of those between the ages of 18 and 24 would raid savings accounts such as ISAs to fund holidays, while 35 per cent would do so to cover overspending on their current account.

The expert went on to warn that this is an unsustainable way of living as “sooner or later the squeeze will shut off their credit, by which stage they will be deep in a hole”.

However, Mr Stephenson’s views on spending appear to go against the findings of research by the Post Office recently, which revealed that 81 per cent of all adults in the UK are planning to save some money in 2011.

Meanwhile, it was also established that 46 per cent of Britons try to store money away for the future when they have spare cash, even though they are still under financial constraints due to the slump.

Britons should keep a note of every time they spend cash either from their current account or credit card in order to budget more effectively in the future, an expert has suggested.

According to Ed Bowsher, head of consumer finance at online resource Love Money, keeping a detailed record of all outgoings is the best way for individuals to find out where they are going wrong with their personal finances.

Mr Bowsher explained that “careful budgeting” is crucial to help funds stretch until a person’s next pay packet, which may include storing cash in savings accounts.

“Keep a record of everything you spend for at least a week, right down to a Mars bar or an apple. Hopefully, you’ll then spot some opportunities for spending cuts,” he advised.

Recent research by the Finance & Leasing Association revealed that consumers are remaining cautious about taking on credit, with new business in this sector dropping seven per cent in the year starting in March 2010.

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