With the cost of living soaring, consumers have had to borrow a staggering £22.4 billion more in loans or on credit cards in the first quarter of 2008 alone, according to new figures from Unbiased.co.uk.
The Unbiased.co.uk's Savings Brake research examines the ratio of our borrowing excluding mortgages, versus our savings. For the first three months of 2008, it revealed that for every pound British consumers saved, they borrowed 69p, which is a significant increase from the 29p borrowed in the same quarter last year.
Whereas the overall borrowing rose by £13billion compared to last year, savings declined by £11billion to £327 billion in the first quarter of 2008 as consumers struggle to pay their everyday bills.
"2008 has started turbulently for many with regards to their finances," David Elms, Chief Executive of Unbiased.co.uk, commented. "We have increased our debt two fold since the same time last year - and reduced our savings."
"A bad situation is being made worse by the fact that - as the credit crunch bites, there is less credit around," Mr Elms added. "Over 10,000 mortgage deals have been withdrawn and personal loans are more expensive than last year - making it harder for people to find affordable credit.
"We need to take control and start managing debt
better and putting some money away for the future," he urged consumers.
While many Brits struggle to put money away for rainy days, most parents still remain keen to ensure their kids have a brighter future, as new figures from the Tax Incentivised Savings Association (TISA) on child trust funds
(CTF) contributions show.
Both regular and lump sum contributions into Child Trust Funds (CTF) are continuing to increase in value. Regular monthly payments have risen from an average £21.20 last year to £21.86 in 2008, while the average lump sum payment made was £488, up by £84 from last year.
During the second quarter of 2008 112,335 new accounts were opened, and the number of accounts with monthly direct debit subscriptions rose by 27,198.
Tony Vine-Lott, TISA
Director General, commented:
"Bearing in mind the financial 'squeeze' that is affecting so many families at the moment, the continuing increase in the level of regular savings into a CTF is particularly encouraging.
"However, the majority of accounts still do not receive any form of top-up," Mr Vine-Lott continued, and urged parents to commit to regular savings for their kids at a level they could afford.
"It's vitally important that children see the tangible benefits of saving at an early age. It is less how much is saved, more that something is saved, that will teach them a lifelong lesson on how to manage their finances more effectively."
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