27th March 2015 at 9:37am
We’ve been carrying out a spot of research into spending and saving in 2015 to get a snapshot of how the UK feels about its finances.
It’s been interesting to get a handle on how people feel about their current financial situation and in what way they anticipate their finances evolving over the coming year. We’re running a couple of blogs to pass on some of the highlights from the research. In our last blog we had a look at pensions and here we’re shifting our focus to take in savings in general.
63% of UK adults feel they aren’t saving enough
The increased emphasis on pensions covered previously has also cast a spotlight on savings more generally. Our study indicates that 63% of UK adults feel that they do not save enough, although only 22% plan to save more in 2015.
This may be due to a certain financial pessimism, as one in four expect to be financially worse off this year compared to 2014. Just 5% expect to receive a pay rise this year, and 33% admitted that they are not on top of managing their finances, which could explain the lack of focus on saving.
And the prospect of lean times is reflected in the attitude to spending. Two in ten of our respondents aim to reduce their spending in 2015, with 19% planning to do so by cutting everyday costs – for instance by switching to discount supermarkets for their food and other household supplies.
Two in ten of our respondents aim to reduce their spending in 2015
Others intend to reduce their spending by eating out less (30%), buying fewer or cheaper clothes (25%), cutting back on credit card use (8%) and switching utility providers (5%).
What do the respondents intend to do with the money saved through reduced spending? Only 5% intend to invest more in 2015, and just 3% plan to add more to their pension pot. A larger percentage are planning to pay off debt, with 16% aiming to pay off a ‘big ticket item’.
7% aim to clear any debt using a credit card, while a further 7% plan to cash in an ISA to secure the required funds. Others mean to pay off their debt via a bank loan (4%) or by selling shares (3%).
36% of UK adults intend to pay off a holiday this year, with 53% of these planning to use their savings to cover the cost. Around two in ten adults say they can afford to pay for a holiday using funds from their salary alone.
Plan for today and for tomorrow
While it’s encouraging to see people are addressing their finances and making a concerted effort to make savings and clear debt, it’s concerning that many of those who are aware they don’t save enough plan to do nothing about it.
If you’re planning on clearing debt and manage to do so, why not keep that ball rolling and think about funnelling the cash you were saving into something else to help fund the future – short term and long term.
Choosing the right savings vehicle has never been more attractive. With up and coming pension rule changes you’ll have greater simplicity, choice and flexibility, making pensions an even more attractive choice for saving. And it’s not just pensions that are getting an overhaul; ISAs too have had a face lift. ISA became the New ISA (NISA) in July last year and a new £15,000 limit was introduced – and it goes up to £15,240 in the new tax year. You can now also choose how you use that limit – all in Stocks & Shares, all in cash, or a bit of both. There’s much more flexibility in ISAs now too.
We’ve a lot more choice available to us now and with choice come decisions. If you’d like more information on the changes to pensions and ISAs and how you might benefit, it’s well worth checking out the Money Advice Service or checking out our ‘Get ready for retirement’ page to get all the facts and figures. Measured decisions make informed choices.
The information in this blog or any response to comments should not be regarded as financial advice. This blog was updated on 19 March 2015 to change the income tax transferable allowance figures.
A Stocks and Shares ISA and a personal pension are investments. Their value can go up or down and may be worth less than you paid in.
Laws and tax rules may change in the future. The information here is based on our understanding in March 2015. Your personal circumstances also have an impact on tax treatment.