Save Money. Live Better

If you are good at the Logo Game, you might guess which supermarket I am referring to!

But the supermarket which uses this slogan might also have some evidence for its claim that saving money does help us to live better.

Since 2015, Asda has been tracking how rich or poor we are feeling as a country, with the help of the Centre for Economics and Business Research. This is a lot easier to measure than whether the economy is growing, or not. The Asda Income tracker has become an excellent way to track this.

Despite the name, the Asda Income Tracker doesn’t actually track income. It tracks how much money families have for discretionary spending. Asda clearly has an interest in this, as it helps them to decide what to sell in its shops. But it’s useful for financial types too.

The Income tracker starts with household income, then deducts taxes and essential/basic expenditure, leaving a figure which is available for discretionary spending. Essential items include things like housing costs, food and drinks, clothing and transport. It could be argued that some things that we might consider essential (e.g. a basic amount of regular savings) aren’t included in Asda’s list of essential items. However, Asda’s Income Tracker is still an excellent way of working out if people in the UK are better or worse off. It’s a bit like an income and expenditure spreadsheet for the country as a whole.

For those of us who like compare ourselves against the average, the average figure for discretionary spending for a family was £203 per week in October 2022.

The research shows that, until February 2021, the amount available for discretionary spending had been increasing. The weekly average reached a peak of £247 and, since then, it has been decreasing. In the year to October 2022, the amount available for discretionary spending reduced by 15%.

As well as general analysis of the UK as a whole, Asda looks at the UK by regions, and by age bands. The South East of the country has had one of the sharpest yearly falls in discretionary spending power over the last year (over 20%), and has now fallen below the national average. Households under the age of 30 have the lowest percentage available for discretionary spending, with the highest being in for households aged between 50 and 64. Those aged between 65 and 74 can spend around 25% of their income on discretionary items, and people who are 75 and over can spend around 30% of their income frivolously.

This information is useful in all sorts of ways, but what it tells me is how important it is to analyse your income and expenditure regularly. A reduction of 15% or more in the amount you have available to spend freely is significant and needs to be managed. There are many who will only realise that their discretionary spending has been excessive when their savings begin to run out, and that’s usually a trigger for friction and unhappiness. Whilst it may be a bit dull to track your spending, if you do so, you can at least recognise that there is an issue, and take action, before it becomes a problem.

Philip Wise |

Managing Director and Chartered Financial Planner

This guide is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.

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