FINANCIAL advisers last week spelled out steps millions of people in this country must urgently take to change their chaotic attitude to money if they want to avoid poverty and hardship.

The warnings came as a damning new study by Business Development Research Consultants (BDRC) revealed that most of us manage money in a way that is haphazard at best, with many finding it hard to take a long-term view.

Patrick Connolly of John Scott and Partners said: “Britons must realise that they have to review their financial position regularly, and certainly when they undergo the social changes that are becoming more and more frequent, such as relationship breakdowns.”

Anna Bowes at Chase de Vere added: “It is important that we start thinking ahead more, as this will enable us to build short-term and long-term savings in good time.”

We are failing to save because we do not generally trust the financial-services industry, which in turn is not keeping up with changes in the way we live.

One of the main reasons so few Britons understand where they should be investing is that they are unwilling to take advice. Roger Donbavand, the BDRC report’s author, said: “Investments, including pensions, have not proved to be ‘sensible’ in recent years. Consumers need direction and reassurance, but financial institutions will only win their trust by offering greater honesty and transparency.”

The fact that millions of people are struggling to pay off unsecured debts is also aggravating the situation.

An excuse many of us give for failing to save is that we plan to use our homes as our combined savings and pension plans. Recent house-price rises and the mistrust many feel for banks and other financial institutions mean we generally prefer to invest in property than pensions or other investment vehicles.

But advisers point out that residential property is an asset class like any other and has periods of underperformance as well as outperformance.

Investing solely in property therefore leaves us vulnerable to a collapse in the housing market crash, while investing in a range of assets reduces risk.

Gordon Brown, the chancellor, offers tax breaks on savings vehicles such as Isas and pensions. However, these are not widely understood and the BDRC report claims that people will not start to save more until interest rates make it more attractive to save than to spend on credit.

Donbavand claims that banks and other financial institutions are also exacerbating the savings gap by failing to offer products that meet modern Britons’ needs.

The life model that most financial institutions base their products and services on is underpinned by the assumption that people marry relatively young, have children and grow old with their partner. But this model is hopelessly outdated.

Times Recommends

• How to sell your home in a downturn
• How to boost your spending power
• Unemployment benefits explained