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That’s Not Entertainment as the Credit Crunch Bites

30-July-2008, Writes Dan Drage dan.drage@consumerchoices.co.uk

A long-term money mood survey carried out by Legal and General shows many are caught up in a credit crunch jam.

The survey, carried out between January 2005 and June 2008, covered a total of 30,000 adults. Across this three year period, trends for prudence, defaulting on payments and spending less money on leisure activities have emerged.

The impact of the credit crunch is most visible in the North, where those spending more than they earn jumped by 82%, now representing 281,000 people, or 11.5% of the population. London, which only saw an 8% increase, shows the largest proportion of the population spending more than they earn at 18%, nearly 1.1 million people. Age wise, it’s those over 65 who’ve seen the most significant increase in financial compromise between 2005 and 2008.

Nationwide, the number of people with cash left over after paying bills and servicing debt has dropped by nearly 1.2 million to just 57% of the population.

The number of people spending on homes and gardens has plummeted by over 20% and those forced to eliminate all spending on entertainment increased by 22%. East Midlands residents and those in the North West have made the most considerable cutbacks on entertainment spends.

Married couples participating in the Survey showed an increase of 62% in those spending more than they earn and a drop in the number of those with money left over after bills and debts of 13.3%. Conversely, 28% fewer singles were spending more than they earn and those who just manage to cover their costs rose by 5%.

Of those polled, the number of men spending beyond their income is up 14% while for women those spending more than their earnings rose 4%.

Jonathan Latham, Director of Wealth Customer Marketing, L&G, had the following to say with regards to these findings:

“Saving for a rainy day has never been more important than now. It is encouraging that MoneyMood shows the overall trend reflects a mood to save rather than spend”

He continues:

“However, for some, this sentiment has not been enough to keep the wolf from the door. As inflation takes its toll, the need for investing becomes even greater as digging into reserves looks inevitable for an increasing number, with nearly 5.3 million people now being forced to spend more than they earn.”

Chris Eagle, Commercial Manager at Credit Choices, knows a couple of savings solutions:

“The outlook for savers has never looked brighter; such is the paradoxical nature of the credit crunch. For a robust savings account, look no further than the Icesave (www.icesave.co.uk) fixed rate account, which offers up to 7.01% AER.”

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