Brits spend more than one year of their salary on impulse

Britain’s appetite for spending money is revealed today as our latest research shows that British consumers spend an average of £30,240 on impulse purchases, such as takeaway coffees, snacks, games and music, over their working life.

This equates to more than the average salary of £26,500*, meaning British consumers are spending more than a year’s salary on ‘spur of the moment’, unplanned purchases.

The investigation into Britain’s savings and debt habits is part of our ongoing ‘Tackling the Savings Gap’ campaign and aims to highlight the seriousness of the savings crisis plaguing the UK. We asked more than 2,000 adults how much of their pay packet is spent on impulse purchases each month.

The results

Men are bigger impulse spenders than women, spending a total of £730.80 per year on impulse versus the £620.40 spent by women. Those aged 25-34 years old spend the most on impulse, totalling more than £910 per year.

The research also compared all UK regions. The results show that:

• People in London spend the most on impulse – £73.30 per month and £39,582 over their working life; and
• People in the South West spend the least on impulse – £43.50 per month and £23,490 over their working life.

Retirement plans

The average Briton believes they will require £23,000 per year to live comfortably during retirement, requiring a total fund of £469,140 from which they could draw down 5 per cent over 20 years.

If the £56 spent on impulse each month were instead invested in a balanced fund portfolio over a 45 year working life**, it could grow to be worth over £110,000, moving savers closer to their ambition of a comfortable retirement.

impulseSave®

It is this idea that underpins True Potential’s world-first impulseSave® technology, which allows people to make micro-payments into their investments, such as an ISA or pension, whenever and wherever they choose. With the touch of a button, they can top up any investment vehicle that isn’t housed within a bank. They can add as little as £1 or as much as needed to keep their investments on track or to reach their financial goals faster.

impulseSave® can be accessed through True Potential Investor, our online investment service available on the web and on mobile devices via iPad, iPhone and Android apps, as well as on Android Wear smartwatches. The technology is also available on True Potential’s Wealth Platform used by 22% of UK Financial Advisers.

Commenting on the research findings, 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. We want to make it as easy to save and invest, and believe that technology can empower the UK public to take control of their finances. It is clear to see the advantages of putting small sums aside on a regular basis, as opposed to spending them on impulse.

“The idea behind impulseSave® is simple – turn spenders into savers. Britons can make small lifestyle changes to keep their investments on track or grow their money faster. For example, instead of purchasing a coffee each morning, small sums can be added to investments on-the-go. Since we launched impulseSave® in March 2014, clients have invested more than £6 million on impulse. The bulk of these transactions have been £10 or under and many are repeat users – showing that with the right technology, you can change behavior and get people actively saving towards their investment goals.”

For more information about how you can change your savings behaviour and reach your investment goals, speak to your financial adviser or visit www.tpinvestor.com.

* ‘Annual Survey of Hours and Earnings’, Office for National Statistics, 2012

** ‘Average age of retirement rises as people work longer’, Office for National Statistics

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