More people put cash aside for those rainy daysas austerity bites

Balancing the household budget is increasingly difficult for many people, with incomes falling and the government's austerity measures attacking those already struggling. Picture: Phil Wilkinson

Balancing the household budget is increasingly difficult for many people, with incomes falling and the government's austerity measures attacking those already struggling. Picture: Phil Wilkinson

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sAVING is becoming the new borrowing in Scotland as households embark on a new era of frugality by cutting costs and bolstering their safety nets.

More money was ploughed into mortgages than taken out in the last three months of 2012, new Bank of England figures show, the 19th successive quarterly net injection of
housing equity.

Experts put the trend down to a combination of low interest rates and restricted mortgage availability and a desire to pay down debts and improve household finances.

Over the same period the national savings ratio reached its highest level for 15 years, ­according to the Office for National Statistics, reflecting a cautious mood among house­holders.

Savings levels are at a two-year high in Scotland, NS&I revealed last week, with the average Scottish saver putting away 7.68 per cent of their disposable income (equating to £103 a month).

Meanwhile, high street spending is down. While the average household spent more in the final quarter of last year than in the previous three months, expenditure has increased only because of higher food and fuel prices.

The average UK household spends £3,150 less annually than five years ago, research by consumer group Which? shows.

But with real incomes falling, jobs on the line and government austerity measures attacking those on low incomes, many households are unable to cope, hence the boom in payday lending.

More than half of the cutbacks identified by the Which? survey were through slashing spending on non-essential goods and services.

Millions of households have been forced to go further, reducing their food and utilities ­expenditure, with many using up their savings to cover shortfalls.

Others are making ends meet by focusing on their daily, weekly and monthly spending to find ways of making their money go further.

Last month, Scottish Friendly took to social network Twitter to find out how people are going about saving money. The Glasgow-based mutual’s Simple Savings Tips competition ­generated hundreds of tweets from people sharing their advice on how to save a few quid here and there.

The top ten were as follows:

1 Save into a tax-free Individual savings account (Isa) to get extra money for your savings.

2 Be organised: Write a detailed monthly budget and stick to it, set aside an amount for savings and, research the best prices.

3 Make a packed lunch for work and use leftovers from the night before.

4 Be fuel-efficient by taking unnecessary heavy items out of the car, avoiding braking sharply and going easy on the gas.

5 Use cashback sites when shopping online.

6 Write down what you save each month –it’s a real eye-opener and will help you save.

7 Always turn off your power sockets at night, especially phone chargers and TVs on standby.

8 Cancel direct debits that you don’t use or need, such as memberships and subscriptions.

9 Put your spare change into a jar and watch the pennies grow.

10 Check every six months that you’re getting the best price on utilities.

It’s very evident that most of the tips are those that will save a few extra pounds a week or month without anyone having to make any sacrifices. But it’s those simple steps that can make a difference in the long run.

The final suggestion can be particularly ­effective. If you are on your incumbent supplier’s standard energy tariff and haven’t previously switched, you could save more than £300 a year by transferring to the cheapest dual fuel online deal on the market.

Tips two and six point to the power of budgeting: Only by understanding exactly what is coming in and going out each month can you really identify where savings can be made.

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