Wednesday 20th July 2016
10 MILLION WORKERS STRUGGLE TO MAKE THEIR WAGES LAST MOST MONTHS
Have you ever caught yourself counting the days until pay day? Do you feel as though there’s a point in the month, after you’ve paid your bills and perhaps treated yourself once or twice, that you’ve more or less run out of money? If so, you’re not alone. One in eight (12%) workers who are paid monthly say their wages run out within 10 days of being paid. What’s more, a third (33%) of all workers struggle to make their money last most months or every month — equivalent to 10.4 million working people nationwide.
It seems this pre-payday pinch is a common phenomenon, but it doesn’t need to be. Getting a grip on your money, by sticking to a budget that works for you, can put you back in control. And if your debts are getting out of control don’t delay in seeking free debt advice.
Andy Webb, Money Expert for the Money Advice Service shares some tips to make your money last longer and avoid the stress of being skint before payday rolls around.
1) Problem: I’ve paid my bills and now I don’t have any money left
42% of people who run out of wages say they simply don’t have a lot of money left after they’ve paid their bills, and many of us find it difficult to keep track of our expenditures as the month goes on.
What to do
Make a budget to work out how much you have going in and out each month. You can use the Money Advice Service Budget Planner to help with this. You can also look for ways of cutting your regular expenses by cancelling unused subscriptions, switching mobile, energy or broadband providers and cutting back on daily spending. The Quick Cash Finder can help with this. You never know, you might find out you have more money spare than you think! On top of that, it might be worth thinking about cutting back for a few months to build up a savings buffer, to protect against sudden financial shocks.
2) Problem: Post-payday spending sprees
One in five people (20%) admit to having post-payday spending sprees — with men more likely to splash the cash (21% versus 18% of women), and they spend more on average too (£101 versus £72 for women). In a spree, men are more likely than women to buy takeaways (27%) and alcohol (25%), while women are most likely to buy clothes (45%) and dine out (34%).
What to do
There’s nothing wrong with treating yourself now and again, but it’s important to budget for it so that it doesn’t impact on your finances for the rest of the month. Before you make that impulse purchase, try to stop and think about whether you really need it and how it’ll impact your finances in the long run. Find a way to break that immediate impulse to splash the cash – after all you can always go back if you decide that you really need it. Some people find they can resist temptation by just walking away. Others might restrict themselves to only spending the cash they’ve got in their pocket. When it comes to things like clothes, gadgets and other expensive items, try shopping around to see if you can find the same item for cheaper elsewhere.
3) Problem: Using credit to cover costs
Those who run out of money tend to turn to credit or store cards (25%), savings (26%) or overdrafts (19%) to survive the month. Of those who turn to credit, four in ten (41%) end up maxing out their credit cards ahead of the next payday.
What to do
It’s tempting to use credit to survive till the end of the month. If you’re doing this, you run the risk of falling into problem debt which can have a serious impact on your financial wellbeing. It’s important to keep track of what you’re spending on credit and to ensure that you’re able to pay off your debts promptly. If you feel as though your levels of credit are starting to become unmanageable, it’s very important that you seek advice from a qualified debt adviser immediately. The Money Advice Service’s debt advice locator tool can help you find free sources of debt advice in your local area.
NOTES TO EDITORS
Opinium conducted quantitative research on behalf of the Money Advice Service; among a sample of 2,019 nationally representative UK adults aged 18+ during March and April 2016. The questions asked respondents about their spending and budgeting habits.
Research data toplines – April 2016
· A third (33%) of people consistently struggle to make their wages last the month
· One in eight (12%) workers who are paid monthly say they run out of their wages ten days after payday
o This amounts to 2.7m people nationwide
· Those whose wages ran out before their next payday rely on credit or store cards (28%) savings (26%) or overdrafts (22%) to survive the month
· Some of the measures taken to cope with imminently running out of wages:
o Living off toast or cereal (21%)
o Digging into tinned food that’s been in the cupboard months (17%)
o Skipping meals to make their money last (11%)
· Some measures can have long-term financial impact though:
o An eighth (12%) revert to paying the minimum back on their credit card
o One in twelve (8%) delay paying their bills
· Of those who do end up relying on their credit cards to make it through the month, almost half (46%) also end up maxing out their credit cards before payday
· A third (33%) of those in work say they consistently have trouble making their wages last until the next payday, struggling most months
· The most common reasons for those who do run out of wages include:
o Having little left after bills are paid (43%)
o Not having enough to cover essentials in the first place (21%)
o Post-payday spending sprees (16%)
o Spending wages without realising it (15%)
· Men more likely to splurge after payday (21% vs 18%). They also spend more on average (£101 vs £72)
o Men are more likely than women to splurge on takeaways (27%) and alcohol (25%)
o Women are most likely to buy clothes (45%) and dine out (34%) when on a spending spree
o The average spend across both genders is £86.69
For media enquiries contact:
Joe Cockerline or Joanna Brady at the Money Advice Service. Email firstname.lastname@example.org or call 020 7943 0593 during office hours or 07767 438 670 outside of office hours.
About the Money Advice Service
The Money Advice Service is an independent organisation. It gives free, unbiased money advice online at moneyadviceservice.org.uk, over the phone on 0800 138 7777, and face-to-face right across the UK. The Service was set up by Government and is paid for by a statutory levy on the financial services industry, raised through the Financial Conduct Authority. Its statutory objectives are to enhance the understanding and knowledge of members of the public about financial matters (including the UK financial system); and to enhance the ability of members of the public to manage their own financial affairs.