No matter how hard we try to stick to a budget, it can sometimes be difficult to keep track of where all our money goes. It's those small, unexpected purchases that can often do it – they can add up alarmingly quickly into a significant sum, and in fact, research from TSB has found that the average Brit loses track of more than £150 a month.
The figures show that 62% of respondents admitted that they spend money they can't account for without checking their bank statement, and 23% approach payday having no idea of where all their money has gone. Women appear to be slightly better at keeping track of things, having misplaced £137 come payday, while men "lose" closer to £200 a month on unaccounted expenditure.
This is despite the fact that the vast majority (93%) of those surveyed claimed that they knew exactly what their biggest expenses are, but it seems that many aren't quite so knowledgeable when it comes to the small stuff. Unexpected food spends are usually the biggest culprit for this kind of thing, with 39% of respondents admitting that they splash out on eating out (20%), takeaways (16%) and lunches (13%). This is closely followed by spending on clothing (13%), coffees (12%) and after-work drinks (7%), so it's easy to see where a lot of this lost money goes.
Additional figures from Aviva show just how much this invisible spending could take its toll – and how it could be put to far better use. Their calculations are based on those small amounts spent on things like coffees, shop-bought lunches, after-work drinks and treats for the children, and revealed that an average person spends £18.23 each week on such items.
Over the year this adds up to £947.96, and over a working lifetime – between the ages of 18 and 68 – this could rack up to a staggering total of £47,398 per person, a huge sum in anyone's book. Younger workers are particularly prone to invisible spending with the typical 18-24 year-old spending an unaccounted £21.17 per week, but, if they were to cut back on these items, Aviva calculates that a 20-year-old could build a pension pot of £136,000 if they invested that weekly £21.17 instead.
It isn't just invisible spending you need to worry about – what if you were losing money from poor banking decisions, too? This could be more common that you think, with 35% of those aged 35+ admitting that they didn't know how much interest their current account pays, while 68% have never shopped around for a different bank account to get a better deal.
This could mean consumers are losing out on hundreds of pounds of interest each year – high interest current accounts pay up to 5% on certain balances – while recent research from the CMA revealed that those who use overdrafts regularly could actually be losing out on £260 per year by failing to shop around.
Not only that, but TSB found that 29% of respondents with a savings account never review it to ensure they're getting the best rate, and considering the state of the market at the moment, this could mean that many people are earning far less than they could be, particularly if they had a bonus that has now come to an end.
If you needed any more reason to keep track of things, just think of what you could spend all that unaccounted money on! Not only could you treat yourself to something you could actually remember, but as Aviva pointed out, you could also use it to build up an exceptional pension pot over the years.
Even those with shorter-term savings goals would be able to benefit. For example, 35% of Aviva's respondents said they'd put the money in a standard savings account, while a further 34% would leave it in their current account as additional disposable income, and either one of these could be ideal. Those small expenditures could easily add up over time and could leave you with a healthy emergency fund or a pot for a one-off expense, so don't spend money blindly – keep track of everything you spend, cut back where you can, and see how big a pot you can build!
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