People across the North East are canny when it comes to managing their day-to-day finances, but a high proportion of them are struggling to put money away for either a rainy day or their retirement.That’s the main finding of new research into the finances of people across the North East, Yorkshire and Humberside that has been carried out by insolvency trade body R3 and ComRes.
Four fifths (80%) of survey respondents in the region said they set themselves a budget for their household finances, with 84% saying that they go through their receipts to keep track of their spending.
Almost three quarters (74%) of those in the North East said they checked the interest rates on their mortgages, credit cards and savings accounts, while the same proportion said they took the time to shop around for the best deals available on these financial products.
But when it came to saving, almost one third of survey respondents in the North East (31%) said they never put money aside for a rainy day, while two thirds (66%) say they’re not currently save money for their retirement.
Sixty-three per cent of those in the North East say they set money aside every month to pay for basic needs like utility bills or household repairs, while a slightly lower proportion (61%) report saving for luxury items like holidays.
One in four (25%) people in the region said they had reached the limit of their bank account overdraft at least once in the last 12 months, with nine per cent saying they had done this a few times over that period.
One in six (17%) reported that they had reached the borrowing limit on one of their credit cards at some point in the last year, while one in five (20%) reported receiving a penalty charge for late payment of a bill.
Neil Harrold, North East chair of insolvency trade body R3 and a partner with Hay & Kilner Solicitors, says: “It is troubling that almost two thirds of people in the region have to regularly set money aside to pay for basics, but at least they are planning ahead. Around a third of people in the North East are making no regular contribution to their savings, while two-thirds make no contribution towards their retirement.
“The financial downturn from which we’re still emerging had a significant impact on individuals’ ability to put money aside for the future when the job of managing their money in the present was often a real challenge, and it’s likely this is still impacting on many people’s finances today.
“Low inflation should help individuals’ incomes stretch further and allow people to put a bit more money away at the end of the month. An improving economy is the time people should be paying down debts or rebuilding their savings, as this can give them a bit of breathing space if and when the economy slows down again, but this may well simply not be possible for many.”
Across the UK, the R3 research also found that women (81%) are more likely than men (76%) to have ever made a budget for their household finances, while 89% of those aged 55 and over say they have never reached the overdraft limit on one of their current accounts, compared to 65% of those aged 18-44 who say they have never reached their limit.
Neil Harrold continues: “Smart phones and online banking have made it much easier for people to keep on top of their finances. This does make it simpler to see if your spending is threatening to get out of control, but there is obviously a big difference between making budgets and then sticking to them.
“Nationally, younger people are more likely to hit borrowing limits, but they are not particularly worse than others when it comes to planning. Younger people have less financial room for manoeuvre than older generations do; and on the other, they tend to have a more relaxed attitude to debt – indeed, getting into debt seems to be part and parcel for financial planning for younger generations.
“Money troubles can hit anyone at any time for any number of different reasons, and it’s crucial that anyone who thinks they’re getting into financial difficulty seeks advice as quickly as possible to find a solution to their problems, so they have the best possible chance of finding the right way forward for themselves and their creditors.”