Study Shows Saving Struggles Of Newly Rich
Even after receiving a financial windfall it appears that a significant number of people are still placing themselves under unnecessary monetary pressure.
Such is the assertion of ICICI Bank in which a recently released study shows that around one in five people have benefited from an unexpected cash hand-out during the last six months. This proportion, it was stated, is the equivalent of every person living in London receiving one windfall each. These consumers were labeled as the “transient wealthy”, a financial demographic between rich and poor people.
And although being the recipient of such a cash influx may mean that some Britons are able to manage loans, mortgages and spending commitments with greater ease it seems that many may be putting themselves under fiscal strain. According to ICICI Bank, around one in 20 state to have put their money into a bank account which offers a poor rate of interest. The financial services firm pointed out that this figure is an indicator that many people are purposely placing their heads in the sand during a period in which the credit crunch is impacting on many consumers’ finances.
Meanwhile, it was indicated that a third of consumers have regretted the way in which they spent the cash that they received.
Following on from saving and spending money ineffectively, it may be possible that people discover in later life that they do not have as much cash as originally anticipated. This may mean they encounter difficulties with meeting the cost of property repairs, paying back a loan or managing a bill or other demand for repayment which is more expensive than they had first thought.
Commenting on the research, Deepak Varghese, head of retail and private banking for ICICI Bank, stated: “There is good news for prospective savers since the likelihood of suddenly coming into money is much higher than in years gone by. Given the size of some of the sums involved it is vital that people really put their money where they will have great growth. Of those that had a windfall in the last six months, a huge one in 20 people said they invested their financial windfall in a bank account and received poor interest. We would recommend keeping your money safe in a fixed-term high-interest savings account to avoid fluctuating interest rates.”
For those consumers who have concerns about their capacity to set money aside for later life, taking out a debt consolidation loan may be recommended. By doing so it is possible that borrowers will be able to meet a number of demands on their spending at once, leaving them with a single low-rate repayment to make each month. In turn, this could leave them with more disposable income money which then could be placed into saving accounts.
A loan for this purpose may be of particular assistance after a recent Friends Provident study showed around one million women between the ages of 25 and 45 are looking for a rich man to bail them out of financial difficulties. It was revealed that only 23 per cent of such consumers are currently saving into a pension, although more than a third spend over 50 pounds each month buying clothes and accessories.
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