- But can people really be trained to become savers? 4 people put the challenge to the test.
With the summer holidays upon us, the British public are gearing up to spend this summer, with 38% planning to use their savings on a holiday over saving for emergency funds, retirement or even a house deposit.
New research1 commissioned by Leeds Building Society has revealed that nearly a third (30%) of the UK describe themselves as spenders, with almost three quarters (73%) of UK adults saying they have an overdraft. Of those that have one, over half (52%) use it every month with one in five admitting they always max it out (21%).
When it comes to saving, nearly one in ten (9%) UK adults do not have any form of savings account whatsoever. Almost a quarter (23%) save less than £40 a month, with those aged 18-24 being the age group most likely to struggle to save any more than this.
The desire to get on the housing ladder remains high with 43% of 18-24 year olds and 32% of 25 – 34 year olds saying they are saving for a house deposit. However, less than a quarter (24%) of those who earn within the average wage bracket (£25-30k2) have a monthly standing order set up to transfer money to a saving account, with (52%) preferring instead to save on an ad-hoc basis when funds are available. As an average house deposit now equates to £21K3, to save for a house within five years, single first time buyers need to be committed to putting away at least £350 a month, which a standing order would help them achieve.
Looking at reasons why we spend more than we save, the study found that a quarter (25%) of adults go shopping at least once a week to buy non-essential items such as clothes and cosmetics. Women are also most likely to go on a shopping spree when feeling down beat with a third (33%) saying they shop to make themselves feel happier compared to just 14% of men.
However, this feeling of happiness is short lived with 41% of women stating they often feel guilty about their purchases compared to less than a quarter (23%) of men. Interestingly, despite often feeling guilty or regretful, 13% of adults won’t bother taking an item back if they later decide they don’t like it.
Following these findings Leeds Building Society enlisted the help of Consultant Psychologist, and author of Willpower For Dummies, Dr Frank Ryan, to provide advice and guidance to those who struggle to save money.
Leeds Building Society invited four members of the public, each with different spending habits and financial situations, to take part in a Savers vs Spenders challenge over a four week period.
Through participating in the challenge, all four were able to save money and reduce their spending habits by following Dr Frank Ryan’s tips which included:
- “Think about all those times you’ve bought non-essential items and ask yourself how long does that good feeling last? It will make you feel good now, but later, you are just paying an extra monthly bill or larger credit card payment.”
- “If you come across a spending opportunity whether online or while out shopping, aim to distract yourself. The impulse to buy something is usually short lived and dissipate after 5 or 10 minutes.”
- “Think about the last time you bought something you didn’t really need or spent more than you could afford. Note the time, place and how you were feeling. Were you tired and stressed, or happy and excited? These are your ‘high risk’ situations. Think ahead and anticipate when you might be in a high-risk situation, and make a plan for it.”
For more information on how the case studies got on with their four week challenge, visit: http://www.leedsbuildingsociety.co.uk/knowledge-base/savers/the-spenders-vs-savers-challenge
Richard Fearon, Chief Commercial Officer from Leeds Building Society commented on the findings:
“As a Building Society, our priority is to help people save money for the things that matter most to them, whether that’s for retirement, a holiday or to enable them to buy the home they want, through providing long term good value to our members”.
“As a result, we were really curious to find out whether it was possible to train yourself to be saver and to find out more about the psychology behind spending and saving personalities. We were impressed that all of our ‘spender’ case studies were able to become more like ‘savers’ by the end of our challenge”.
“It’s interesting to see just how many people impulse buy and use shopping as a way of cheering themselves up when they’re feeling low, despite it often making them feel guilty afterwards. We would encourage anyone who is in need of a willpower boost to visit Leeds Building Society’s website and have a read of these hints and tips to help become better at saving money.”
If you’re interested in taking on the Savers vs Spenders challenge and would like further advice from Dr Frank Ryan, visit: http://www.leedsbuildingsociety.co.uk/knowledge-base/savers/how-to-train-yourself-to-become-a-better-saver/