Two thirds of workers plan to spend more In 2014
More than two thirds of working-age people believe that their spending will increase in 2014, reveals a new poll.
When asked, “Is your spending on non-essentials likely to increase this year, compared to 2013?” 67% of those surveyed by deVere Group, one of the world’s largest independent financial advisory organisations, replied either “considerably” or “moderately.”
19% said they are unlikely to increase their non-essential spending in 2014, 9% claimed their spending would fall, and 5% did not know.
Almost 600 working individuals between the ages of 20 and 65 were polled in the UK, the U.S., Hong Kong, South Africa, France, Spain, Germany and the UAE.
Of the findings, deVere Group founder and chief executive, Nigel Green, said: “Our survey highlights that, generally, people have a growing sense of financial confidence. It is a sentiment that is echoed by the World Bank, which recently increased its forecast for global growth for the first time in three years.
“It is this building momentum in confidence that is the probable driving force behind the expected increase in spending on things such as holidays, designer clothes and eating out in 2014.”
Whilst Nigel champions the consumer spending that is amongst other important factors fuelling growth, the results of the poll – which undoubtedly show a level of growing optimism – come with words of warning.
He said: “Should the extra consumption be short-term and should it lead to real growth, that is reasonable, but it is not a viable longer-term strategy for individuals or economies.
“Most people are not suddenly earning higher salaries, yet spending on non-essentials is expected to rise. This suggests that many people will fall back into pre-crash ways of running down their savings, or reducing the money they put aside each month, to fund spending.”
He continued: “The live-for-today attitude is all very well, but it comes at a potentially heavy price. For instance, most financially-savvy people who want to enjoy a fulfilling, active retirement, know that relying on the state pension is not an option. They know they have to save during their working lives to be able to retire when they feel like it. This is especially true as we’re all living longer, meaning the accumulated money has to last longer.
“Every year of our working lives we should to be adding to the savings bottom line, above the rate of inflation.
“Typically, the earlier you start saving, the easier it is to reach your retirement objective. The truth is if we spend more now, we’ll need to save more in the medium and longer term, or carry on working longer than we had anticipated.”
The cautionary advice on spending also extends to developed economies. Nigel also said: “An increase in consumer spending will boost economies in the short-term, but it could also reduce longer-term growth and investment through the lower income it generates. If you don’t save, you can’t invest.
“The ideal is a balanced, trickle-up economic system.”