Looking at UK money statistics, it’s clear that millions of Britons are not great at managing their money. In fact, according to Skipton Building Society, who recently surveyed 2,620 people about their financial habits, one in 10 British adults admit to being ‘terrible’ with their money.
Are you concerned that your own money/savings habits are far from perfect? Here’s a look at four warning signs that could mean it’s time to sort your finances out.
You’re constantly in the red
If you’re spending more than you earn, it’s a problem. You can’t possibly hope to enjoy a comfortable future if you’re constantly in the red and relying on credit cards, or worse still, ‘payday’ loans, to get by. Yet, many Britons are in this position.
The key to sorting this out is to draw up a budget and stick to it. List your income in one column and your expenses in another, then look at where you could cut your spending so your outgoings are less than your income.
You’re not paying your credit card off in full
Credit cards can be useful at times. However, they can also literally destroy your wealth, and your future prosperity, if you don’t pay your balance in full each month. With many credit cards having interest rates of 20% or higher, debt can snowball pretty quickly if you’re not careful. If you’re struggling with credit card debt it’s one of the first things you should sort out.
You’re not saving regularly for the future
Regular saving is one of the most effective ways of building long-term wealth. Yet millions of people across the nation are not saving regularly. For example, in the 2016/2017 financial year, just 17% of the population put money into an ISA. That’s a staggeringly low percentage.
Why are people not saving? Looking at Skipton’s research, a third of people blamed their lack of savings on the fact their monthly outgoings were so high that they never had anything left over to save at the end of the month.
There’s a little trick that can help you here. The key is to pay yourself first. No matter whether your monthly salary is £1,000, £2,000, or £5,000, as soon as you receive your pay cheque, put a portion of it (ideally 10% or more) into your savings. Then go about paying your bills and living your life with what’s left. The chances are you won’t even miss that money you’ve put away, but your savings will grow substantially over time in the background.
You have no savings at all
What’s worse than not regularly saving? Having no savings at all. Apparently, 25% of Britons have zero savings, according to Skipton. And 10% of British adults over the age of 55 don’t have a single penny put away for their future. Grim statistics, indeed. A lot of people are going to get a shock when they reach retirement age and have to rely on low State Pension payouts.
If your financial habits are questionable, it’s probably a sensible idea to do something about it… sooner rather than later. Put a plan in place now and you may be able to turn things around before it’s too late. If you’re looking for some tips, check out our free report below on ‘financial independence’.