A new report out this week has revealed that the UK's love of luxury means that one in three have nothing left in their bank accounts at the end of the month.
The study by uSwitch.com examined the nation's spending habits and found that every month 4.8 million consumers spend more than they earn, nine million break even while the average Brit ends up with just £157 left to spend on essentials.
A collective attitude of 'work hard, spend hard' has been forcing consumers to accrue more and more debt in order to finance their luxury lifestyles, a trend which has seen a significant increase over the past decade as so-called celebrity lifestyles become more attainable.
However, spending on non-essential items has soared at 2.5 times the rate of inflation while growing by 65 per cent against a modest 48 per cent rise in net income. Worryingly, over the same period, debt repayments have shot up by 104 per cent as almost six million consumers turn to either a loan
, credit card
, or both in order to meet their monthly overheads and debt problems
What’s more, the findings of the study by uSwitch.com have been confirmed by the dire high street retail figures which saw December report the lowest ever profits since 2004. Ann Robinson, Director of Consumer Policy at uSwitch.com, comments:
"Britain is suffering from a bad case of affluenza. We are caught in the grip of a spiral of conspicuous consumption where it’s no longer enough to keep up with the Joneses, but instead we want to live like our favourite celebrities.
"But it’s clear that our salaries can’t keep up with our ‘Hello’ lifestyles," she said, "the shock reports from the high street are the first signal that this trend is changing and, with the credit crunch beginning to bite, consumers need to start paying serious attention to their spending habits."
There is, however, some good news for those who feel their debts are too big to handle. A further study carried out by free personal finance exhibition 'Your Money Matters' has found that the average British working man will celebrate being debt-free at the age of 52 and three months, while the average woman is just 47 and two months meaning that the fifties is set to be an age where debts are no longer a worry for Brits.
The research found that on average, UK adults are in debt to the tune of £10,306 (£12,631 for men and £7,982 for women) not including the hefty mortgage amounts many have hanging over them. Yet, according to the study, paying off our debts takes a combination of sheer hard work (salaries), smart investments (property and share dividends) and good fortune (inheritance, lottery wins).
Cesarina Holm-Kander, Financial Expert and CEO of fabinsurance.com comments: "As the cost of living continues to increase, we’re being forced to save through our 20s and delay the major milestones of life until our 30s. We’re not having kids till 30 or getting married till 31. And can you blame us? Kids cost £186,000 each and you get little change from £20,000 from a wedding," she said
"On top of that, the average cost of a house is now well over £200,000 so we’re not even getting on the housing ladder until the grand old age of 34. All of this and the average UK salary is just £25,986 for men and £20,488 for women so it’s no surprise that the majority of us are hitting our fifties before shaking off the shackles of debt."
© Fair Investment Company Ltd