Workers waste £948 a year on coffee and snacks
A typical adult in the UK spends £948 a year on ‘invisible’ items, a new study has revealed.
The research, commissioned by investment and retirement solutions provider Aviva, found that, on average, an adult spends £18.23 a week o n items such as takeout coffees, shop-bought lunches and post-work drinks.
Over a year, this adds up to £947.96 and over a working lifetime of 50 years, this mounts up to a whopping £47,398 a person – and that’s before inflation is taken into account.
Aviva’s survey of 2,000 working adults between the ages of 18 and 68 looked at their spending on snacks such a chocolate bars, fruit and crisps; shop-bought lunches, shop-bought drinks, treats for children, newspapers and magazines, alcoholic drinks bought at lunch or after work, cigarettes and takeaway food.
Young people were the worst offenders, with workers aged 18 to 24 typically spending £21.17. Aviva points out that a 20-year-old could build a pension pot of £136,000 if they were to save this money rather than spend it, assuming conservative returns.
On a positive note, 70% of those surveyed were keen to change their ways, though their focus was on saving money in the short term. More than a third (35%) said they would put their money in a standard savings account, while a similar number (34%) would leave the money in their current account. Though 14% would put the money saved in a piggy bank, only 5% would invest it in a pension.
Rodney Prezeau, consumer platform managing director for Aviva, said: “When we buy a coffee or a snack, we often don’t give it a second thought but it’s incredible how small change can really stack up over time. Our study found that 26% of people don’t really keep track of their spending at all, and a further 22% only keep an eye on larger purchases, so many of us may be surprised if we actually look at where our money is going.
“It’s interesting that most people say they’d be willing to cut back in order to save, but most people are focused on the short term. We’d encourage people to also think about how small savings can be utilised in the long term, for example in a pension or in an investment Isa. As our calculations show, even small amounts can make a big difference.”
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.