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Brits are twice as committed to spending as they are to saving
Thursday 6th October, 2011By Martin Fagan
Average person with credit cards will spend £152,000 repaying them over a 40-year period, says Standard Life
UK adults with credit cards spend £3,804 on repayments each year, while people saving put £1,680 each year into savings accounts and ISAs, according to the Standard Life.
If these commitments remained unchanged over a 40-year period, the savings and investment giant says Brits with credit cards would spend over £152,160 on payments alone - £84,960 more than those who make monthly contributions into their savings accounts and ISAs would have accrued.
Not only do people managing credit cards pay more, they also spend more time worrying about it, spending twice the time worrying about these payments than savers think about their savings.
A study by Standard Life found people reach a peak of financial commitments between ages of 35-44, when they spend on average £1,160 a month on 11 financial commitments (mortgage, insurance, credit card, etc.) and think about them for 45 minutes every day.
Overall, people with savings and ISAs think about them for 24 minutes a week on average, while those making credit card payments think about these for just over an hour a week.
Standard Life’s study identified three significant life stages: first comes commitment sleepwalkers (18-24) who have a smaller amount of financial and personal relationship commitments and their regular financial commitments amount to just £458 a month. They also spend the least amount of time thinking about their finances.
Then there is the fully committed (35-44), who are at the peak of their regular financial commitments, spending an average of £1,160 each month and likely to be paying a mortgage, looking after a child and paying off any debt accrued in earlier life.
And then commitment slowdowns (55-plus), who are starting to become less financially and emotionally committed. They are spending £818 on their commitments each month, almost £100 less that the average.
“It's always a challenge to set priorities - debts can easily mount up and paying off any credit card debt you have should always take precedence over savings,” said Standard Life's John Lawson.
“However, our research suggests people are not thinking about their savings as much as they could be, even though it's our savings and investments that can prevent us from falling into debt in the first place.”