19 million people in the UK don’t have an approach to budgeting

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A study by insurance company Royal London (released in January 2017) revealed that 19 million people in the UK don’t have an approach to budgeting that they feel works*. The research also found that almost a third (30%) of the UK population struggle to keep up with bills. The findings are particularly timely following research from the Trades Union Congress showing average household debt in the UK is at a record high of £12,887, not including mortgages.

In its report, Royal London said: “19 million people in the UK don’t have an approach to budgeting they feel works and many struggle to manage their day-to-day money.” It added: “Saving and setting aside money for emergencies can be hard and it’s estimated that 21 million people in the UK have less than £500 in savings to cover unexpected bills like mending a boiler or replacing a fridge.”

The company conducted a three-month study on a pool of 411 people of different ages and from across the country. Participants were asked to test either a mobile phone budgeting app or simple pen and paper method for the duration of the period. It was an attempt to see whether spotting spending patterns could change habits for the better.

The results, claims the company, speak for themselves: at the end of the trial one in two (49%) admitted that using a budgeting method had been helpful in monitoring what they spent, while more than one in three (37%) said they had a better understanding of their in- and outgoings as a result.

Indeed, the participants explained that they’re already financially better off as a result of the project. For example, Debbie (62 from the Wirral) identified expenses she hadn’t allowed for, like the hairdressers or mowing the lawn. “That’s £60 a week I didn’t count in monthly expenditure so I was always in my head £60 better off than I actually am,” she said.

Another interesting finding was that 23% of people taking part in the study claimed that using a budgeting method helped them stick to a budget. It’s a sentiment we’ve heard time and again from our own Union Prepaid Card customers. Not a debit or credit card, the Union Prepaid Plus Cashback card is a handy budgeting tool which helps foster a healthy spending diet. You load it with money before you shop, rather than paying for it afterwards, so there’s less chance of going over your budget. What’s more is that you can earn unlimited cashback on your everyday shopping from partner retailers including Sainsbury’s, ASDA and Argos.

Feedback from a prepaid cardholder also found it’s a great way to get the most out of their shopping As one customer reported: “…I’ve already had over £100 cash back, just for buying my groceries, toiletries, household items, a few clothes and some gifts at Christmas.”

The lesson, concludes Royal London, is pretty obvious: “For those who want to know where every penny goes and who are looking to cut their spending, using a budgeting tool clearly can help.” And the good news, it adds, is that even if people struggle to do it as regularly as they’d like, there’s “value in doing it for just a small amount of time” too.

*Source: http://www.royallondon.com/Documents/PDFs/2017/Royal%20London%20-%20Looking%20after%20the%20pennies.pdf

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