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Do you know how much your impulse buys cost?

Do you know how much your impulse buys cost?

Category: Savings

Updated: 21/11/2014
First Published: 21/11/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The odd takeaway coffee, or the occasional splurge on the latest game release, may not seem to lighten your wallet too much at the time, but over the course of your lifetime, all these odds and ends can add up to a rather eye-watering sum.

According to research by True Potential, impulse buys, such as takeaway coffee, snacks, games and music, can rack up to around £674.40 per year. This means that over the course of our working lives we spend about £30,240 on spontaneous treats – a hefty sum to fritter away during a time when many people's budgets are being squeezed.

Shockingly, this total equates to more than the average salary of someone in the UK (£26,500), which means that we are letting more than a year's worth of income trickle through our fingers on unplanned purchases.

Big spenders

The research found that men were bigger 'spur of the moment' buyers than women, with men splashing out a total of £730.80 per year on items that catch their fancy. Women, on the other hand, indulge themselves by spending £620.40 on spontaneous purchases.

The younger generation were also found to be far bigger spenders than their more mature counterparts, with those aged 25-34 racking up far more impulse buys.

The research also picked up regional differences between the amounts people spend on unplanned purchases. Perhaps unsurprisingly, those living in London were most likely to be tempted to spend, with capital-dwellers splashing £73.30 per month on indulgences, which adds up to a total of £39,582 over their working lives. Meanwhile, those living in the South West were the most conservative spontaneous spenders, with only £43.50 spent per month, adding up to a far more moderate figure of £23,490.

Big spenders = small savers

Bearing these costs in mind, it's easy to see that small spends every now and then can actually drain your account significantly over time. And this means that money that could be put safely away in a savings account ends up going towards a random, unnecessary purchase.

While treating yourself is not a crime, not putting enough money away for the future could make things less comfortable later on.

People in the UK estimate that, on average, they will need an income of £23,000 a year to live comfortably in retirement. According to True Potentials calculations, this means that a pension pot of £469,140 will be required for a typical retirement. This is a staggering sum, and one that can easily be underestimated.

In light of this, saving the money spent on impulse buys could be a worthy investment, especially as it wouldn't involve tightening the household budget any further.

Commenting on our spending habits, True Potential managing partner, David Harrison, said: "These figures show that small purchases soon add up. With the popularity of online shopping and the many temptations we face to buy on impulse during daily life, it has become far too easy to get into debt.

"It is clear to see the advantages of putting small sums aside on a regular basis, as opposed to spending them on impulse."

What to do?

Quite simply, all you need to do is to trim back your impulse buys. Cutting down your treats may be hard at first, but the long-term rewards will be worth it. Try substituting things like your favourite takeaway coffee with a good quality coffee from home, or if you always go out for lunch, try making yourself a tasty treat instead. These things may seem small and insignificant, but they can really make a difference.

Once you have started to slim down your spending, you will need somewhere to stash this extra cash. A good savings account is essential for this and, if you think you will be tempted to dip into your spare funds, a fixed account could be the deal for you. Check out our top fixed savings accounts to find the perfect one.

Building up a decent pension pot should also be at the forefront of your mind, so if you haven't already joined your company's pension scheme, sign up now! This money will come straight out of your salary, so you won't miss it. If you are already a member, why not think about increasing your monthly contribution? After all, now that you are spending less on random purchases, you may not even notice.

What next?

Find a fixed savings account

Read our retirement guides to find out how to provide for your future

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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