Most people would like to see their money stretch farther, but millions have no idea of how to budget or manage their money.
At least 21 million people have less than £500 savings and worry that they could not cope in a financial emergency, according to new research.
The statistic comes from financial firm Royal London, which offered customers a smartphone app to help with their day to day spending.
Three out of four customers in the study gave up before the end of the three-month test despite 93% stating they recognised the importance of tracking their spending.
The remaining customers reported a striking change in their approach to managing money at the end of the trial.
Taking control of finances
Budgeting and understanding how money was frittered away led to many of the research subjects giving up smoking, cycling to work instead of catching a bus and shopping in cheaper supermarkets.
Others scrutinised their bank statements for wasteful spending and a few bought quality coffee machines instead of buying from coffee shops.
Royal London’s director of policy, Steve Webb, said: “Many people dread the arrival of credit card bills and wonder how they can make ends meet.
“What was interesting about our research project was the way in which the simple act of monitoring what you spend every day or week made some people more aware and put them more in control of their finances.
“They were then able to make their own choices about priorities. Monitoring spending with an app or even a notebook will not work for everyone, but several of the participants in our research were clear that it had helped them to get a grip on their finances.”
Many of the people taking part in the trial identified that they forgot to consider small amounts in their budgets, such as treats for children, charity donations and other expenses of a few pounds on credit and debit cards.
“It’s only when they added up all these amounts that they really understood how much they were spending each month without accounting for the total,” said the report.
One customer found that she was spending £60 a week on accounted expenses such as a gardener and dog grooming.