Millions of Britons admit to overspending by as much as £150 a month – yet many refuse to give up their phone contracts, takeaway meals and subscription television to balance budgets, according to research.
Half of adults believe they are living beyond their means, the survey suggests, with some doing so simply to keep up appearances so they look better off than they actually are.
Despite the danger of plunging themselves into serious debt by relying on credit cards and overdrafts from month to month, one in five are unwilling to sacrifice spending on luxury items to keep their costs down, said insurance group Aviva.
Tim Orton, of Aviva, said: ‘It’s been a tough few years for people financially. Money has been tight, but worryingly rather than cutting back, it seems there are some who are continuing to live way beyond their means.
‘When you think about it in these simple terms we can all make some adjustments that could make a material difference in the future. A few indulgences now and again can be an important part of enjoying life, but creating and sticking to some simple savings goals will undoubtedly pay dividends in the longer term.’
Just under 1,000 people told Aviva they don’t always live within their means, with 40 per cent of these people putting their overspending down to the fact they don’t earn enough to cover day-to-day costs.
A further 21 per cent said they simply ‘can’t resist’ buying things, while a quarter stretch their budgets to ensure their children don’t go without.
Particularly worrying is the finding that one in ten people who exceed their monthly budgets say they do so to appear like they have more money than they actually do.
One in five of the 2,000 people surveyed say they don’t, or wouldn’t, change their lifestyle to reflect their financial situation, with broadband named as the thing Britons would be least willing to give up, followed by mobile phones, holidays and nights out with friends.
Just over 40 per cent said they don’t have extra money to put aside at the end of each month, while 17 per cent are wisely concentrating their spare cash to paying off debts.
Forty-two per cent of people view forms of credit such as overdrafts and credit cards as extensions of their bank accounts, leaving themsevles vulnerable to significant interest charges, while three out of five say they need to make more effort to stay in the black.
The research comes after a report by the Money Advice Service found that almost nine million Britons admit to being in serious debt, with many having to forgo basic necessities on a monthly basis.
But it appears that while some cutbacks on the basics may be made, others insist on maintaining their spending on items that some may perceive as luxuries.
Encouragingly, adults said that money they put into their pensions and life insurance cover is something they wouldn’t give up, but Aviva said that many others are neglecting putting money into savings or pensions because they don’t have enough left over at the end of the month.
Mr Orton said: ‘Given the level of debt in the country and an aging population, it’s hard to see how future governments will be able to support people in the way they have in the past.
‘Making some small changes to our spending can have a big impact on the pot of money we end up with in retirement. Simply taking lunch to work each day or not buying a morning coffee can equate to £20 per week, £80 per month, £960 per year or the equivalent of more than £40,000 over an average working life.’
2. Mobile phone
3. Annual holiday
4. Run a car/motorbike
5. A takeaway/meal out
6. A night out with friends
7. Sky TV subscription
8. Pay into my pension
10. Pay for life insurance/ critical illness