Finance through the ages

Money 2019-5-2
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How does your generation’s attitude to spending differ from others’? We reveal all…

We have recently carried out research into how different age groups approach their finances. Based on our findings, here are our top tips for money management and budgeting no matter what your age, income, or plans for the future.

Financial security

Firstly, we asked if people felt financially secure, and, if not, what salary they think they would need to achieve it.

Those aged 65 or over were found to be the most likely to consider themselves financially secure (65%), surprisingly closely followed by millennials. 62% of 25-34 year olds claim to feel financially secure, compared to just 46% of those in the 55-64 age bracket.

So how much do we think we would need to earn in order to feel financially secure? Our research found that 15% of people would feel secure with a salary of £25-30k, which is in-line with the average salary of £28,677.

But when it comes to millennials, they have their sights set a little higher, with 41% saying they’d need a £50k-£55k salary to feel at ease.

Our top tips to help you feel more financially secure:

  • Rank your debts and focus on paying off those with a higher interest rate first. This will save you money in the long run and can help to clear debts more quickly. Just be sure to make the minimum repayments required on all outstanding agreement to avoid any charges.
  • Review your budget and identify any areas that you can cut down. Be realistic and start by cutting one thing out at a time, over time you’ll soon notice the difference it can make.
  • Focus on you and your finances, not what everyone else is doing. Write down what you have financially, and what you want, then work out the steps you need to take to get there.

Worryingly, one in every five people (21%) said they don’t believe they will ever be financially secure, regardless of their salary. But why? Savings habits could explain this, with over a third of people (36%) putting less than £50 into savings each month. But what age groups are saving the most and the least?

Saving for a rainy day

When it comes to saving, millennials are leading the way, which may explain their comfort when it comes to their financial security.

25-34 year olds are putting away around £225 per month on average, almost £50 more each month than 35-44-year-olds and over £100 more than those aged 55-64.

Age

Average monthly savings

18-24

£135.98

25-34

£225.45

35-44

£178.00

45-54

£150.60

55-64

£121.93

65+

£145.70

Overall, our research found that the average amount being put away for a rainy day each month is £159.08, with those aged between 25 and 44 being the only ones saving more than the national average.

Our tips for topping up the savings pot:

  • Automating your savings is an easy way to bulk them out without even noticing. You can do this manually by setting up a standing order, or use a service like Plum or Monzo, which have the option to round up your purchases and put the difference into a savings pot.
  • Much like any big task, breaking your savings goal down into smaller chunks can make it so much more manageable. Write down what your target is and when you want to achieve it by, then do the maths to calculate how much you need to set aside each month.
  • Include how much you want to save in your monthly budget, rather than trying to save what’s left over at the end of the month. If you find your expenses are too high to manage any savings each month, then take a look at what you may be able to cut down on.

Impulse buyers

The level of financial security among those aged 25-34-years-old is also reflected in their spending habits when it comes to big ticket purchases (£300 or more.) According to our research, this generation is by far the most likely to buy items in this price bracket on the very same day they first saw it, whereas others are more inclined to wait.

 

18-24

25-34

35-44

45-54

55-64

65+

I usually purchase within the same day as seeing something I want

12%

24%

10%

7%

9%

9%

Our top tips for managing impulse buys:

  • Create a waiting list of 30 days for any expensive items. Once the 30 days has passed, if it’s still something you want to purchase then the cost will have been spread across two paydays
  • Avoid temptation by disabling all push notifications from shopping apps, so you can’t be drawn in to sales and discounts
  • Include some money within your budget to spend on things you enjoy, such as clothing or eating out. If you’re tempted to impulse buy something and it’s within your budget, then go for it, but if not then perhaps it’s time to revisit the 30 day rule

Top spending priorities

Next, we looked at what people’s top spending goals are and when they expect to achieve them.

Overall, home improvements came out on top, yet surprisingly saving to buy a property didn’t even make it into the top five.

The top five main priorities are:

  1. Making home improvements (36%)
  2. Taking the holiday of a lifetime (19%)
  3. Long term travelling (17%)
  4. Getting a new car (16%)
  5. Getting a new item of tech (i.e new smartphone) (13%)

Our top tips for budget home improvements:

  • Look for low budget jobs that can have a big impact on your home. Replacing door handles or a quick lick of paint can change the look of an entire room, without the hefty price tag
  • Never taking the first quote is the golden rule of saving money on home improvements. If you’re short on time, comparison sites like Check-a-Trade can help, and don’t be afraid to negotiate on costs once you have your quotes
  • Much like with furniture, you can buy new kitchens and bathrooms that are ex-display, which can really cut down the cost

While home improvements are the number one goal across the country, with buying a house not making it into the top 5, the data tells a different story when focusing on young adults.

For those aged 18-24 years old, getting onto the property ladder still appears to be the focus, with 29% selecting this as their top goal at the moment - more than twice the national average of 12%.

Whilst for 25-34-year-olds, our research found that one in three (33%) in this age group are prioritising long-term travelling above all else - almost twice the national average of 17% - which may explain the higher level of savings.

Our top tips for saving money on travel

  • Prepare to be flexible on your flight dates and times, as this will give you more options to choose from, which will often come at a lower price
  • Try to spend more time in fewer places. Not only will you save money on the travelling around, but you’ll have more time to experience each place in all its glory
  • Research jobs you can do on the side to earn a little extra cash, such as proof reading or taking part in surveys. You can also continue with these while you travel to keep earning spending money

When it comes to how soon people believe they will achieve their goals, over a third (37%) believe this will happen within the next year, although 17% were doubtful that they would ever achieve their financial goals.

 

Whatever your own personal goals, if you need a helping hand to make them a reality, our low cost loans start from just 3.2% APR Representative between £7,500 and £25,000.

 

Hitachi Hints and Tips is intended to be informative and interesting. It does not constitute financial advice, and you should always do further research when making any financial decisions. All information was correct at date of publication.
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