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Right now, lots of us are very conscious of our finances, and looking for ways to manage our spending more effectively. Whether that’s through an increased focus on budgeting, smarter borrowing, or simply an effort to reduce waste, the current cost of living rise is causing people of all ages to rethink their everyday habits.
A new digital survey by YouGov on behalf of HSBC has revealed some interesting insights on how the rise in living costs are causing some Brits to cut back, and others to borrow more.
Let’s take a look at some of the key findings from the survey.
One in five Brits are actively saving for future bills
The research found that 21% of people are now actively saving money as a way to deal with future bills. With gas, electricity and food prices hitting the headlines on a regular basis, this is hardly surprising.
Saving is a sensible way to deal with future costs, but not all households have the means to do it. Many of those surveyed are actually having to borrow more to make ends meet.
Spending on credit cards
One in ten Brits surveyed are now spending more on credit cards, with a further 5% saying they’ve taken out an additional credit card or loan due to pressure on household budgets.
The survey reveals that more than half of Brits (54%) have one or two credit cards.
This graphic shows the three most popular ways of borrowing money.
Interestingly, 60% of those surveyed said they pay off their credit card balance in full every month. This figure drops to 43% for households with children, confirming that becoming a parent adds additional financial pressures to a family. Those with two or more children are more than twice as likely to have an outstanding debt of £3,500 or more.
The vast majority of people (89%) have avoided a missed or late credit card payment over a six month period, but this statistic is very different for the 18-24 age group. 10% of respondents in this age bracket had missed or been late on a payment four or more times over the same time period. This suggests that the younger generation either has a different approach to borrowing, or a different ratio of debt to income.
Just over one in ten respondents had a personal loan. Buying a car is the most common reason why Brits take out a loan, followed by home improvements. However, a sizeable chunk of the population (20%) is using loans as a means of debt consolidation or to pay off a credit card debt.
18-24’s struggle with loan jargon
The survey also explored understanding of common terms used by lenders. Almost half (48%) of 18-24 year olds did not know what APR means, while 46% did not understand the meaning of ‘base rate’. More than two in five didn’t know whether their lender even used those terms.
If you’d like to help your children develop their financial literacy, HSBC has a range of useful resources here.
The HSBC survey provides a snapshot of borrowing and spending habits in Britain right now, and as such it’s a really interesting insight into the current financial climate and how we’re all dealing with it. How do your habits compare to the results – do any of the stats surprise you?