Is debt your priority?

2 April2021

Household budget

When money's tight, where do your priorities lie? Do you cut back on the fun things in life or are you tempted to sacrifice some of your longer-term aims? Do you use your 'spare' cash to pay off debts, or use it to finance a few treats?

Some recent research indicates that many cash-strapped households are full of good intentions - but don't always live up to their expectations of themselves!

A simple example:

  • 29% of people questioned said they would cancel their Sky TV subscription if they had to cut back on spending, while
  • 10% said they would stop saving / investing money.

However...

  • 13% said they had actually cancelled their Sky subscription when they ran into money problems, while
  • 19% said they had stopped saving / investing money.

The figures come from Skipton Financial Services, whose Priority Report gives us a look at people's 'attitudes and behaviour towards spending and saving in the current economic climate of higher inflation and pay squeezes'.

If you'd like to talk to a debt expert about the best way of cutting back on your expenses, you can request a callback here - or call us on 0800 195 2911.

How people prioritise

Right at the top of the list of Brits' 20 greatest priorities, you'll find petrol, followed by clothes. Encouragingly, putting money into savings accounts or investments made it to number 3. Paying off credit card debt and/or overdrafts came in at number 10 - halfway down the list, but still above a lot of non-essentials.

Here's the list in full:

1. Petrol
2. Clothes
3. Put it into savings account or investment
4. TV subscriptions (e.g. Sky)
5. Meals out at restaurants
6. Takeaways
7. The pub
8. Put towards the summer holiday
9. Haircuts
10. Paying off overdrafts or credit card debt
11. Cinema
12. DVDs
13. City breaks or trips away
14. Giving the kids what they want
15. Tickets for live events (for example football, music, etc.)
16. Videogames
17. Put towards a pension
18. Put towards a housing deposit
19. Put towards a new car
20. Placing bets

When money's tight, of course, different people will cut back in different ways. Not just because they're individuals, but because their situations are different.

We're all different

After all, someone with no debts at all might decide it's a good idea to save up for the future, so they're protected against any financial 'shocks' they run into later on.

For someone with debts, it's not so simple.

If they have any spare money from month to month, it usually makes more sense to put it towards their debts, rather than saving it. Generally, the interest rate they're paying on their debts is a lot higher than the rate they could earn on any savings they have.

If there's no spare money in the monthly budget at all, they're running a real risk: any unexpected expense could tip them over the edge and leave them unable to pay their bills. If you're in this situation, we'd recommend you look for ways of cutting back on your non-essential spending so there's a bit of leeway in your budget.

And if your budget doesn't stretch far enough to cover all your bills, you should think about getting some professional debt advice. You can click here to request a callback or talk to one of our experts on 0800 195 2911 - we might be able to recommend a debt solution that could bring your monthly debt payments down to a realistic level.

Image iStockPhotos / MBPHOTO, INC

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Tags: money, saving money, money saving, debt, Skipton Financial Services, Skipton, Sky TV, petrol, clothes, savings, tv, meals, haircuts, cinema, DVDs

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