Brits – too much in debt to save
All sense of responsibility has gone out of the window. UK consumers have plunged themselves into debt and are sinking hard-earned cash into interest repayments rather than their bank accounts.
Our savings ratio is at its lowest level ever and has plunged us right back to the 1960’s when there was a spending ratio of 2.1. This means that we are only saving £1 for every £50 that we spend.
So why has the savings ratio slumped so rapidly?
The Office of National Statistics (ONS) has blamed this collapse in savings on rising interest rates, tax inflation and additional household expenditure. All of this results in an increase in debt repayments which people try to repay on wages that do not fall in line with inflation. As personal debt rises, more and more people are declaring bankruptcy.
House prices have also risen over the past decade, which has created an illusion in our minds that we can spend for today and reap back the benefits in bricks and mortar. This can force people into serious financial ruin if they run up additional debt alongside mortgage repayments. These non-savers could be in for a short, sharp shock if the property market goes into meltdown
People should start clearing their outstanding debt now and make a vow to save a healthy set sum per month to avoid being entangled in the next financial whirlwind.
