Being patronised is awful, isn’t it?
Yes, yes, yes, I KNOW I shouldn’t have that coffee and that if I saved the £3 a day I spend on coffee, by the end of the decade, I could drive a Ferrari. I get it. Stop sounding like my mother.
But in the post-Brexit world of uncertainty, cutting the cloth, tightening the belts, reining in the spending – whatever you want to call it, is probably rising up your priority list.
One thing definitely worth becoming more mindful about is your “invisible spending”. It’s the worst kind, precisely because it seems to happen by itself, without you doing anything. And that is mostly because payment methods have become so sophisticated over the years: direct debits, paypal, Pingit, Apple Pay, contactless, that we can be paying for things in our sleep.
Aviva, the insurer, recently published research on the nation’s ‘invisible spending’ habits, and how easy it is to bring them into the light – then knock them on the head.
Aviva reckons your invisible spending habit will cost you an average of £47,300 over your lifetime. That’s almost twice the average UK annual salary. On, basically, coffee. On average, invisible spending costs each person £79 per month, or £948 a year.
Professor Darren Duxbury from the Newcastle University Business School, and the Behavioural Research in Finance (BRiF) group, explains “people do not appreciate how quickly small, disaggregate expenses add up to large amounts of aggregate expenditure.”
But the thing is, 75 per cent of people said they don’t have enough disposable income to save. And if we do save, it is for things like holidays rather than retirement.
Rather than not having enough money, if we are honest with ourselves, is it actually that that disposable income, is, in fact, disposed in ways that we don’t even see? It seems so.
And it is perhaps hedonism that is to blame. The research found that 44 per cent of people like to ‘live for the day’ and 14 per cent like to buy things on impulse. Almost a third of people think shopping for fun is valuable. We also like to: buy lunch during the week (74 per cent) and go to the pub a few times a month (26 per cent).
When did we all decide that enjoyment now was worth more to us than peace of mind about the future? Or was it decided for us, by Starbucks and Wetherspoons and they’re deliciously cheap and tempting offerings?
Younger people obviously spend more, as this table shows:
|Age||Average yearly amount UK adults could be saving|
What can we do?
Well, we need to think more about the social and psychological value of money, ie. what that money we are spaffing on coffee could alternatively do for the world, our personal wellbeing and our peace of mind over the long term. Not just its economic benefit, ie. that it means you can afford to consume caffeine.
“Money also has social and psychological value. When we pay for goods and services by contactless card, we may be conscious of the economic value of money that we are exchanging, but the social and psychological value are not as salient to us. The absence of such emotive ties makes it is easier to spend, in part perhaps, because the cost of consuming is simply the economic value of the money exchanged.”
– Professor Darren Duxbury, Newcastle University Business School and the Behavioural Research in Finance group.
You can argue, of course, that that coffee does an awful lot for your wellbeing. And many will. But if you are able to slowly change the way you think about £3 here and £3 there, seeing these discrete bits of spending as your children’s university education paid for, perhaps, then you might just forego the odd one or two. And homemade sandwiches can be SO much nicer. Who needs Pret?