It was only a few years ago that many people seemed to have espoused a ‘Spend! Spend! Spend!’ mentality whereby items would be bought on credit, often with little regard as to how or when they would actually be paid for.
But new research in the UK and the US has found that there may now be a cultural shift towards saving for the future, particularly amongst young adults.
During the height of the credit boom in the mid-2000s it was possible to obtain a credit card with a score in the 500s (nowadays you need anything upward of 620) and credit limits were increased with alarming regularity.
This meant that many people got into the mindset that they were being given free money and, as the lenders were offering it, there was no question that they would be able to pay it back at some point.
Furthermore, this easy access to credit also prompted people to take out loans and even remortgage their properties to enable them to buy the things they wanted but not necessarily the things they needed.
As a consequence of this spendthrift lifestyle many people are now finding themselves in financial difficulty as they cannot keep up with their repayments and cannot obtain extra credit.
This has resulted in an unprecedented number of borrowers having their credit files badly damaged as banks have no option but to write-off their debt. In addition, repossession of houses in the US hit a record high in 2009 as more and more people defaulted on mortgage payments as their houses fell into negative equity.
It appears though that people have learned from these mistakes and there is a new generation of determined savers coming to the fore.
Joint research by Chase and Slate and US News found that 73 per cent of young adults were determined to spend less in 2011 and 81 per cent planned to save for specific goals.
In addition, UK-based research by Barclays found that 32.2 per cent of young adults save an average of £258 per month and have a very clear idea of the financial position they want to be in by time they reach their 30s.
This study also found that these young adults have very specific savings goals and future targets with 35 per cent wanting to have purchased their own home by the time they are 30 and a further 23 per cent want to be on the second rung of the property ladder by that point.
Further research by British based banks Yorkshire and Clydesdale also highlighted how over a quarter of Britons are saving more money than this time last year with average annual savings of £1,320. And these two banks have just released a savings product aimed at first time buyers saving up for a deposit on their first home.
So as the consumers seem to be learning from the lessons of the past it is to be hoped that the banks will also take note as, although overspending on credit was the fault of the borrowers, there’s no question that it was further fuelled by the irresponsible lending habits of the banks.
And this in turn will hopefully lead to the ‘Spend! Spend! Spend!’ mentality being replaced by a culture of ‘Save! Save! Save!’
Article written by Les Roberts, personal finance writer at moneysupermarket.