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The average Briton is left with only £148 spending money each month after essential bills and expenses, according to a new index launched this week by ISA provider Scottish Friendly.
The new index reveals that despite taking home an average monthly salary of £2,171 after tax, less than a tenth remains after living expenses like mortgage payments or rent and utilities are taken into account.
Despite this, paying down debt and building a savings pot remains a priority for many, with over half of people (54 per cent) still managing to save or invest each month. On average, people put aside £72 each month, although nearly half (47 per cent) of those who save, manage to put aside £100 or more.
Part of this may be in anticipation of the worst, with around a quarter of people (25 per cent) believing that their financial situation is likely to worsening over the next three months. Indeed, of those people who are saving, over half (56 per cent) do not have a specific reason for doing so.
Neil Lovatt, product director at Scottish Friendly, comments: "There has been a transformation in the British mindset when it comes to managing finances. In the recent past, household budgets were very much driven by borrowing. However, the emphasis now seems to have gone full circle and we have returned to a post war emphasis on saving and paying down debt, despite many having to deal with a very tight budget"
"The index has revealed that one in three people think that saving into an ISA or savings account each month is an essential part of the monthly budget, while over half of the UK believes that it is vital to pay into a pension."
"The emphasis on pensions is misguided in my view and more can and should be done to encourage better understanding of the options available to savers. When you are only putting small amounts of money aside each month, it is even more important that you make it work harder for you."
"This is particularly true for the younger generation where over a third of 18-24 year olds believe that saving for retirement is a necessity. This is fantastic news as it shows how the younger generation is taking a long-term view of their finances. However, at the same time, around two thirds do not realise that they are entitled to two ISAs each year – an investment ISA as well as a cash ISA. When we are dealing with the most accessible and flexible form of tax efficient saving, this lack of knowledge is concerning."
Regionally, people in Scotland find themselves with the most disposable income each month, with an average of £160, while people in Northern Ireland only have around £125 to work with. While the South West has the greatest number of people saving or investing each month (61 percent), on average they contribute the least at just £66 a month compared to the £75 put aside on average each month by people in Yorkshire and the East Midlands.
|Region of the UK||Average monthly disposable Income|
|Yorkshire & Humberside||£152|
Scottish Friendly is not responsible for the accuracy of the information displayed on externally linked third party websites. The Scottish Friendly Group of Companies consists of the following companies: Scottish Friendly Assurance Society Limited – Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Member of AFM, Member of ABI: Life, Savings and Investments. Scottish Friendly Asset Managers Limited – Authorised and regulated by the Financial Conduct Authority. Member of The Investment Association. Registered in Scotland No 187215: OEIC Managers, ISA Managers. Scottish Friendly Insurance Services Limited – Authorised and regulated by the Financial Conduct Authority. Registered in Scotland No 113007. SFIS (Nominees) Limited - Registered in Scotland No 397351. Head office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.