Royal London has published a new report ‘Looking after the pennies’. It is a study of the impact of regular monitoring on household spending and saving, which looks at whether budgeting tools could help people manage their money better.
19 million people in the UK don’t have an approach to budgeting they feel works and many struggle to manage their day-to-day money and 21 million people in the UK have less than £500 in savings to cover unexpected bills like mending a boiler or replacing a fridge.
Royal London asked a selection of customers to use a mobile phone budgeting app or a simple pen and paper method to create and keep a budget for three months. They asked about budgeting habits and management of finances at the start of the study and then again at the end.
Key findings were:
- At the start of the study, 93% recognised the importance of tracking household expenditure and 84% told us they felt in control of their finances.
- While people recognise the importance of budgeting, that doesn’t always mean they do and 31% said they don’t plan their spending closely or at all.
- Although the majority felt in control of their finances, 30% reported struggling to keep up with bills.
- At the end of the trial, 1 in 2 (49%) said that using a budgeting method was helpful in monitoring what they spend.
- More than 1 in 3 (37%) said that since using a budgeting method they have a better understanding of their income and expenditure.
- Around 1 in 4 (26%) said they are now more likely to discuss their household finances with their partner/ family/household.
- Financially vulnerable people seem to have benefitted most from the exercise. We explore this in more detail in the main part of the report.
- After taking part in the trial a slightly higher proportion of our sample:
- more closely planned their spending
- claimed to have a clear idea of how to create a weekly/monthly budget
- were more aware of how much they spend and on what
- could pay an unexpected bill of £300 out of their own money without dipping into savings or cutting back on essentials.