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‘Invisible spending’ costing UK £48bn annually

Kit Klarenberg
Written By:
Kit Klarenberg
Posted:
Updated:
26/10/2015

‘Invisible spending’, regular expenditure on items such as coffees and snacks, costs UK consumers around £48bn a yea, Aviva research has revealed.

The study suggests the average person spends £18.23 every 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. Over a working lifetime, between ages 18 and 68, this could stack up to a total of £47,398 per person, before potential inflationary increases are taken into account.

The table below illustrates average weekly invisible spending, per age group.

Age Average spend 
18-24 £21.17
25-34 £20.94
35-44 £19.36
45-54 £18.92
55-64 £15.54

The figures demonstrate the potential for future savings if consumers cut back on such spending. The table below illustrates how these ‘invisible’ amounts could potentially grow over time, if invested in a pension instead.

Age started investing Weekly amount invested Pension fund at retirement Total amount available after tax
20 £21.17 £136,000 (at age 68) £105,000 (at age 68)
25 £20.94 £111,000 (at age 68) £88,000 (at age 68)
35 £19.36 £68,000 (at age 68) £58,000 (at age 68)
45 £18.92 £37,100 (at age 67) £33,000 (at age 67)
55 £15.54 £14,200 (at age 67) £14,000 (at age 67)

However, when asked what they would do with the money they saved, most consumers placed greater emphasis on shorter-term goals rather than long-term investments; 35 per cent said they’d put the money in a standard savings account, while 34 per cent would leave it in their current account as additional disposable income. Only five per cent would invest in a pension.

“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,” said Rodney Prezeau, consumer platform managing director for Aviva.

“Our study found 26 per cent of people don’t really keep track of their spending at all, and a further 22 per cent 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 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!”

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