When creating your Financial Plan, keeping control over your spending is essential to success.
But what happens when some of that spending is invisible?
According to new research from Aviva, we are spending £48 billion a year through a habit of ‘invisible spending’.
The term has been coined by Aviva to describe the small, almost invisible amounts people spend on a regular basis without paying too much attention.
A study of 2,000 adults across the UK has discovered that on average each person spends £18.23 each week on items such as coffees, shop-bought lunches, post-work drinks and treats for children.
Over a year this adds up to £947.96.
And over the course of a working lifetime – measured in this research as between ages 18 and 68 – this could stack up to a staggering total of £47,398 per person.
This significant total is before any potential inflationary increases are taken into account.
The research also shows that younger people are more likely to be the biggest ‘invisible spenders’, possibly because they have fewer demands on their cash and are less used to budgeting.
According to the research, 70% of adults who spend on these items – such as chocolate bars and canteen cups of tea – said they would be willing to give up or cut back on their spending in order to save more for the future.
Although when asked what they would do with the money they saved, most people were focused on shorter-term goals rather than long-term financial objectives.
35% said they’d put the money in a standard savings account, while a further 34% would leave it in their current account as additional disposable income.
14% said they would put the money in a piggy bank, although 5% would invest in a pension.
As part of the Financial Planning process with our clients, we carry out a thorough review of spending to make sure money being spent each month is not being wasted.
Where invisible spending is identified, it can be carefully considered and reallocated to more important financial priorities where this is agreed it makes sense.
How much invisible spending are you doing each month?
[tweet_box]On average each person spends £18.23 each week on ‘invisible spending’ [/tweet_box]What to read next? Understanding your expenditure is essential to achieving financial goals
