As many British households feel the squeeze ahead of the January pay day and look to review their finances for the year ahead, new research reveals bill payers underestimated their main expenses in 2015.
The study by Santander found that people had underestimated their council tax, utilities and TV, phone and broadband by an average of £1,4592 last year. That’s equivalent to almost £39 billion across the UK as a whole.
The findings show that whilst bill payers estimated their annual household bill costs to be £2,528, in reality, they spent an average of £3,987.
Of all the bills, TV, phone and broadband outgoings were the most significantly underestimated with households estimating annual spend to be 53 per cent lower than actual costs.
The research also highlights that many households are struggling to cover the cost of their household bills.
34 per cent say they can only just make ends meet, one in four (25 per cent) admit to borrowing money or raiding their savings in order to pay their bills and 6 per cent claim they often do not have enough or never have enough to pay their bills.
Matt Hall, director of banking at Santander, said: “It can be difficult to keep track of bills and price changes. In winter months, when bills may rise, it’s even more important to make your money go further.
“At a time when many households are reviewing their annual expenditure and trying to cut costs, it’s worth remembering that it’s often cheaper to pay your household bills by direct debit.”
Santander’s research does suggest that households are taking proactive steps to monitor energy consumption and reduce costs, as one in eight (12 per cent) have a smart meter or plan to install one.
One reason why estimated and actual bill spend differs may be a lack of attention to bill statements. Almost a third (30 per cent) of bill payers admit they do not read their statements thoroughly, while 5 per cent do not even open their statements.