People who say they ‘live for today’ are less likely to have enough cash left over at the end of the month (42%), according to the latest HL Savings & Resilience Barometer.
Hargreaves Lansdown (HL) found that they’ll be hit harder by the cost-of-living crisis too, so this time next year, only 7% will have enough surplus cash.
Additionally, fewer of them have saved for vital future milestones – like buying a house or retirement. Only 34% are on track for a reasonable pension income.
And they’re less likely have the savings or protection in place to cope with nasty surprises. Only 47% have enough savings.
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said: “Never trust anything you see on an inspirational poster.
“Following the advice to ‘live for today’ might feel like a recipe for instant happiness, but it’s one of the worst pieces of advice you could get – at least when it comes to your finances.
“Spending your life in hot pursuit of a good time might make you the envy of your friends, but it comes at a horrible cost. As the cost-of-living crisis bites, the price you pay will become all-too clear.
“The HL Savings and Resilience Barometer looks at all sorts of aspects of our finances, and breaks them down between those who say they live for today and those who have at least one eye on the long-term.
“Those who focus on today, and engage in an endless battle to avoid FOMO, are less resilient in almost every way.
“Their finances are more likely to be on a knife edge right now. Some 42% have enough cash at the end of the month to be resilient – compared to 54% of those who consider the future. They’ll also be hit harder over the coming year by rising prices.
“The number with surplus cash at the end of the month is set to fall to just 7% (compared to 13% of planners).
“They’re also storing up problems for the future, because they’re less likely to be prepared to put money away for their goals. It means fewer of them own their own home. They’re also falling short when it comes to retirement savings. Only 34% are on track for a reasonable pension income – compared with 50% of those who prefer to plan ahead.
“They’re more vulnerable to nasty surprises too, because they haven’t planned for them. Only 47% have the recommended level of at least three months’ worth of essential expenses in a savings account for emergencies – compared to 69% of people who aren’t so focused on today. Meanwhile, only 35% of those who live for the day have enough life cover compared to 45% of those who consider the future.
“The solution doesn’t mean resigning yourself to daily misery in the hope that one day life will be less awful. In any case it’s not sustainable, because nobody wants to live in a constant state of self-denial. As in all things, a reasonable balance is the most sensible approach. We all need to prioritise a safety net – of enough savings and protection. After that, the aim is to find a combination of saving towards your goals – like buying a house or being able to afford to retire – and spending on the things that make life worthwhile today.”
