"Reality gap" in British attitudes to saving

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"Reality gap" in British attitudes to saving

While the majority of the population does not believe it can save a penny more than it currently does, two people out of three spend spare cash on luxuries, IFA Promotion has found.

In its annual study, the financial advice firm discovered that 71 per cent of the population thinks it cannot save any more, with 12 million adults not putting anything away for a rainy day at all.

IFA Promotion also found that if faced with a financial crisis, only one person in five (19 per cent) has enough savings to see them through it. Most people would look to outside help in these circumstances, with 22 per cent turning to their families for help and 21 per cent asking the bank to lend them money.

But while the nation seems broadly unprepared for hard times, people are still spending on unnecessary items instead of saving.

Two thirds (63 per cent) of the people who believe they are at their savings limit say they spend money on unnecessary items.

Moreover, 54 per cent of adults have said they would not “reduce unnecessary spending in order to save more”.

And even if their income increased by 25 per cent most would take more holidays or improve their homes. Just one in three would put money into savings or pensions and only 41 per cent would pay off their debts.

"Long-term saving just doesn't seem to be registering as a priority in the British psyche, but it's never been more critical," said David Elms, chief executive of IFA Promotion.

"The only way the UK's vast long-term savings gap can be addressed is by first closing the reality gap between what we need to save and what we think we can get away with," he added.

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