More Brits Become Cautious

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The credit crunch had given Brits a new sense of caution, with 44% of them saying they would save any extra cash they get their hands on.

In this tough environment, people need to save, not spend and it seems Britain has woken up to this – just 10% would throw caution to the wind and blow any extra funds on luxuries, according to Fairinvestment.co.uk.

In addition to the high percentage of people for whom saving is the number one priority when it comes to extra cash, paying off debts comes first for 26% of Brits. This is great news, because getting rid of debt is the only way to improve finances – more debt is never the answer.

And, on top of the quarter of Brits who would use the extra cash to clear their debts, Fairinvestment.co.uk says a savvy 6% would use the money to make mortgage overpayments.

Sharon Bratley, chartered financial planner at Fairinvestment.co.uk, says: "It is good to see that saving is important to so many people. However, although having a financial cushion is wise, it is also wise for people to pay off any debts they have first, which are likely to be charging high interest rates, and then save any extra cash. The low percentage of people who would choose to spend any extra cash on luxuries is also encouraging and suggests that Brits are being more careful with their money.

"Making overpayments on a mortgage, if allowed, would also be a smart move in the current financial climate, as house prices are falling, the more equity a homeowner owns, the stronger position they will be in if they have to remortgage any time soon. And, as the average savings account rate falls to near zero, paying off the mortgage early may work out more profitable than putting the money in a savings account."

SOURCE: Fairinvestment.co.uk, 17/03/09

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