Britons splash the cash rather than save

Last updated at 14:32 18 July 2006


Britons are more likely to blow a pay rise on luxuries than use the money to pay off debts or save more, a survey has revealed.

Seven out of 10 people claim they cannot afford to save more, but the majority of people admit that if they received a 25 per cent rise in their income they would spend the extra cash.

Nearly two-thirds of people would spend the money on a holiday, while 54 per cent would use it fund home improvements and 46 per cent would buy new clothes, according to IFA Promotion, which supports the work of independent financial advisers.

Other popular uses for the extra money included buying a new car, spending it on entertainment and spending it on hobbies.

But only two out of five people said they would use the extra cash to pay off their debts, and a similar proportion would save it towards their retirement.

However, the figures are an improvement on when the same research was carried out last year, when just over a third of people said they would channel a rise in their income into long-term saving.

David Elms, chief executive of IFA Promotion, said: "Despite well-documented and countless warnings that as a nation, we are not saving enough, it seems that people are yet to adopt a sensible savings mantra.

"And whilst the research is based on a hypothetical situation, it serves to highlight a very real problem in that people are too reluctant to forgo their spending to secure a comfortable financial future.

"People need to place clearing debt and saving much closer to the top of their list of financial priorities."

People in Scotland were most likely to use the extra money to repay debts at 55 per cent, but people in the North were most likely to blow the extra cash on a holiday at 71 per cent.

BMRB questioned 2,000 people during October.

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