Why are Brits so smug about money when we're not saving?

We're not saving - so why are we so confident?

We're a nation that's living hand-to-mouth, but we're convinced that we're doing pretty well. One in five people have no savings, and we put aside an average of just £150 a month. However, two thirds of people say they are good with money.

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A study, by Santander, found that we're not saving anything like enough. The average Brit puts aside just £150 a month - which has to cover everything from short-term emergencies, to medium-term spending like a new car or boiler, annual spends like holidays and Christmas, and long term savings. This is a tiny fraction of what we ought to be putting aside to secure a comfortable future.

It also found that we're saving badly too. While many people are saving for the medium or long term, 53% of people hold their money in a savings account and 27% in a cash ISA - despite the fact that both are producing miserable returns during a period of unprecedentedly low rates. Meanwhile only 10% of Brits invest in stocks and shares ISAs.

Smug

However, there's a significant proportion of people who are fairly smug about their situation. Almost two thirds say that their friends or family would describe them as being "good with money". Of these, almost three quarters pay all their bills on time, half seek out promotional offers rather than paying full price, 44% keep an eye on their bills to see if they could be getting a better deal and 38% pay off their full credit card balance at the end of each month.

Given that only 44% of people are saving for a bigger safety net, 34% for a holiday, 26% for unexpected bills, 22% for retirement, and 14% for a home - it would seem to indicate that some of this smugness may be a little misplaced.

What's wrong?

The problem comes down to the way our brains work. We see cause and effect only when it's directly in front of us. On a day-to-day basis, we see our spending, bills and current account. When we cut costs and spend within our means, we can immediately see the consequences of our actions, reap the rewards, and feel smug.

What we don't see is what lies ahead. We don't consider the major financial outlay that will come out of the blue, or the shortfall when we come to retire, so we don't feel the consequences of neglecting these areas of our finances until further down the line.

It means we can simultaneously be feeling smug and on top of our finances, and yet be building up a major financial crisis a few months or years down the track.

But what do you think? Are you guilty of this, or are you on top of everything? Let us know in the comments.

21 PHOTOS
Vintage money-saving tips
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Vintage money-saving tips
Back then there was no choice, because the mass-produced microwaveable meal was just a glint in a marketing guru's eye, but now, cooking from scratch can save substantial sums.
The older generation learned that there were meat-free days of the week to save money, and that if you had meat you''d stretch mince with breadcrumbs, or buy cheaper joints and use every scrap.
Perfect fruit and vegetables and top-of-the-range brands are a new phenomenon. Buy generic non-branded food and fruit and vegetables in whatever size and shape is most affordable

Nowadays we rush around the supermarket grabbing things we like the look of - with little idea of what we're going to do with it. Making a list and thinking about what you buy can save you thousands of pounds over the course of a year.

There's no such thing as 'left-overs' there's just the ingredients for tomorrow's dinner. The remains of the meat can be stir-fried the next day, the vegetables blended into  soup, and the potatoes saved for bubble and squeak.

Try an experiment and eliminate everything from your life with the word disposable in the title. Not only will you save money, but your bin will take far longer to fill too.

Before you bin anything, think twice about whether you can give it a second life. Think carefully, does your granny have her tried and tested tips that she has a habit of mentioning, for instance, washing out freezer bags? If you mock, you're missing a trick and wasting money and resources.
Cutting out draughts and insulating your home properly can cut 10% off your heating bill.
Back in the 1940s when no-one had central heating, people got used to wearing another layer at home. Try lowering your thermostat gradually, and only stop when those around you start to notice - you'll be surprised how much you can save.
If you save your washing and dish washing until you have a full load every time you'll save energy and save money.
Over the generations we have been sucked into believing the hype. In the days when adverts were few-and-far between, we managed without many of the things we consider essential nowadays. Re-consider what you buy, and why. Without advertising, would you buy any of it?
It's always cheaper to save in advance and plan a purchase than to rush in and borrow - which could end up costing you hundreds of pounds more in interest.
Older generations typically withdraw what they can afford to spend in cash and then leave their debit card at home or deep in their wallets. This has the advantage that they don't tend to reach for a debit or credit card and spend more than they can afford.
Because the older generations couldn't borrow their way out of trouble, they tended to plan more. Give your family a financial safety and a nest egg for the future.
Back when there were only a finite number of items of clothing to go around in a neighbourhood, people borrowed from each other for special occasions. Nowadays swapping and sharing can save substantial sums
Back in the 1940s when no-one had central heating, people got used to wearing another layer at home. Try lowering your thermostat gradually, and only stop when those around you start to notice - you'll be surprised how much you can save.
There was a time not so long ago when no-one could actually remember anyone who had actually bought a bike. They were passed through the siblings, then across family and friends networks, so that decades later, children were still learning to ride a bike for free. Of course it helps if you buy something gender-neutral, then you can hand it down, and reap the benefits as others hand expensive toys on to you.
In previous generations, neighbours would think nothing of asking each other to babysit, walk their dog, or to borrow a ladder. Nowadays we pay handsomely for babysitters and dog walkers, and each have an expensive ladder gathering dust in the shed.
The army of people who come to our homes to do odd jobs is a new phenomenon for all but the very wealthy. You may well have the skills required to complete these jobs, so get stuck in.

Ditch going out for dinner or browsing round the shops for taking a walk, visiting the beach with a picnic, or holding a family DVD night.

Nowadays we're constantly striving for a bigger TV, a flashier car and a better kitchen. Generations ago people never considered that they would ever be able to afford bigger, flashier and better, so they got on with the business of enjoying what they had.
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