Individuals could add up to £1,500 a year to their retirement savings by trimming back on little luxuries, according to research.
Scottish Widows claims the average person spends £124 a month on treats, such as ordering takeaway meals, taking taxis and buying new clothes that are rarely worn.
A great number of people underestimate how much they actually spend on everyday luxuries by about £74 a month. With £74 going unnoticed, it shows how unaware people are of their own spending on luxuries.
A survey conducted by the Financial Capability found 39% of adults don’t feel confident managing their money, and 11.5 million have less than £100 in savings.
Almost two thirds (62%) of the 5,008 people polled in 2017 said they planned to set a financial goal in 2018, through either saving more (45%) or spending less (28%).
At the same time, 32% said they could not afford to put any more money into their pension pot, suggesting many people view their luxury spends as essential e.g. a coffee in the morning.
1 in 3 respondents rein in their spending by an average of £109.03 in January every year, with 30% using this money to pay off debts accumulated in the previous year and around Christmas time.
Robert Cochran, retirement expert at Scottish Widows, said:
“January is a time when we set out to improve our financial habits for the year ahead and while it would be unrealistic to suggest we live entirely without little luxuries, there is an important message about the need to ensure untracked spending today doesn’t harm our financial security tomorrow.
Almost 23 million people are failing to save adequately for retirement, and so there is no time like the present to make the first step towards positive change.
It can also help build a longer-term saving habit and make a real difference to quality of life in retirement.”
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