A recent uSwitch survey has shown Britons are still spending heavily despite the continued parlous state of the econonmy. This attitude is creating an opportunity cost which is preventing us from achieving what may be most important to us.

An article in the Guardian which highlights uSwitches’ findings details that four million women and three million men have amassed £24bn of unsecured debt during the economic downturn.  uSwitch suggests that this spending habit is a sign of recession ‘shopaholicism’ and highlights that while more women than men posses these traits, men acquire a higher average personal debt of £3,425 compared with £3,353 for women. Unsecured debt among British females totals more than £13 billion, compared with more than £10 billion for men.

Such short term-ism will not help long term goals to be achieved; periods of our lives where we spend more than we save will be looked back on with frustration and disappointment when it is realised that what really matters to us (being mortgage free, providing more for our children, early retirement or at least a comfortable retirement) could have been more readily achieved if we had been less profligate with our discretionary spending.

The ‘must have’ culture in which we live is part of the reason that the western world got into financial difficulty and, while continued high street spending will help the retailers, amassing large unsecured debt through purchasing unnecessary items will only serve to prevent us from achieving financial freedom. An attitude of saving then spending rather than the reverse will allow us to make choices in the future from which we can really benefit.

People complain that they would love to save more but there is never enough money at the end of the month. A simple change of syntax can solve this; rather than spending then saving, save then spend. By setting up a standing order or direct debit you will soon get used to having less money with which to make non critical discretionary purchases and will start to benefit from increased savings.

Consider your recent purchases, say in excess of £50, you have made. How important to you are they really? If you had gone without what would have happened? Would your life be any less rich without them?

By comparison, if you are making £50 a month in unnecessary purchases, if that was saved instead in an average savings account at 3% gross every year after five years you would have £3,237. If you opted to take some investment risk and received 5% pa you could expect to have £3,404 or £3,579 if you received 7% gross pa.

On the basis that clothes go out of fashion, no longer fit or wear out and technological purchases either become outdated or break down after the warranty expires, going without in the short term to enjoy a greater value of money at a later date would be the obvious choice.

Of course some purchases are necessary and money is to be enjoyed, but it is the purchases people make for the sake of spending whether it is due to a clinical addiction or simply from bad habits that can cause problems and limit financial freedom later on.

Andrew Neligan is an award winning, fee based Chartered Financial Planner.

Image from Emerald2810 on Flickr.com