Half of households have become worse off over last year
As half the population gets poorer, it's people in their 30s who are finding it hardest to manage their money successfully.
Research from Halifax shows that approximately half the population say they have become worse off over the last year.
You might say that’s not so surprising, but I’m struck by the fact that it’s folk in their 40s and 50s who are hardest hit. Look at this table:
To what extent do you feel your household is better or worse off financially compared with this time last year?
|
|
Total |
Teens |
20s |
30s |
40s |
50s |
60s |
70-75 |
|
Better off |
13% |
9% |
16% |
18% |
11% |
8% |
12% |
7% |
|
About the same |
37% |
32% |
40% |
41%
|
34% |
32% |
38% |
42% |
|
Worse off |
49% |
47% |
40% |
41% |
55% |
60% |
49% |
51% |
|
Don’t know |
2% |
12% |
4% |
1% |
1% |
0% |
1% |
0% |
Source: Halifax
So 60% of people in their 50s feel they are worse off now than they were a year ago. I’m pretty sure that number would have been much lower if you had asked the same question six or seven years ago.
That said, even though the 50somethings feel poorer, they’re not the ones who are most likely to run out of money before the end of the month.
That distinction goes to the 30somethings. In fact, 58% of 30somethings say that they ran out of money before the end of the month on at least one occasion last year. That’s compared to 57% of 40somethings and only 42% of 50somethings.
In the last 12 months, how often, if at all, has your household run out of money before the end of the month?
|
|
Total |
Teens |
20s |
30s |
40s |
50s |
60s |
70-75 |
|
Every month |
9% |
9% |
11% |
10% |
11% |
8% |
5% |
2% |
|
6 times or more |
8% |
7% |
9% |
12% |
12% |
5% |
4% |
3% |
|
3-5 times |
8% |
6% |
7% |
10% |
10% |
9% |
3% |
0% |
|
Once or twice |
21% |
27% |
23% |
26% |
24% |
20% |
14% |
5% |
|
Never |
49% |
31% |
38% |
38% |
40% |
55% |
72% |
87% |
|
Don’t know |
5% |
20% |
11% |
4% |
3% |
3% |
1% |
3% |
Source: Halifax
Perhaps it’s not so surprising that people in their 30s and 40s find it hardest to stay solvent for the whole of the month. After all, there’s a good chance they’ll be facing the costs of children while also paying off a mortgage.
But I am a bit surprised by how many people run out of money at least every other month. For 30somethings, that’s 22%. My worry is that if you’re running out of money that often, there’s a strong chance you’re going to start using credit cards as borrowing tools, or even worse you’ll take out a payday loan.
Following either course for one month isn’t necessarily a disaster, but if repeated, the interest can pile up and you can end up in a real mess.
Solutions
So is there anything people in this situation can do to improve things?
Well, first up, I should say that I don’t have a magic bullet. I’ve got some tips, but you may have thought of them all already. You may even be doing them. But even if that’s the case, you may still be able to do these simple things better.
Here goes:
1. Boost your income
Is there any way you can boost your income? Could you do overtime at work? Or maybe get a second job in the evenings or weekends?
Another option is taking in a lodger. Thanks to the Government’s Rent-a-Room scheme, you could earn up to £4,250 a year from this and not pay any tax. Or you might be able to let your spare room to travellers from around the world. You could potentially charge as much as £30 a night for a spare room in London, depending on location and so on. Read more in How to turn your spare room into a one-room hotel.
If you don’t fancy strangers staying in your home overnight, you might prefer direct selling. What could be better than being paid to organise parties?
Avon is the best known company in this field, but there are plenty of other businesses who are keen to find direct selling reps. These include Ann Summers, Usborne books and Body Shop. Read more in How to make money in the evening.
Or maybe you could make money at car boot sales.
2. Cut your spending
Cutting your spending is easier said than done. But I firmly believe that the best place to start is by budgeting effectively.
That means drawing up a tough but realistic budget and then sticking to it religiously.
You may be budgeting already, but are you sure there isn’t any more spending that you could cut back. Do you allow yourself a bit of cash to spend on ‘extras’ that you don’t really need? Try to keep a record of everything that you spend money on, and then you might spot some areas you could cut back on.
You might find it easier to stick to your budget if you used Lovemoney’s MoneyTrack budgeting tool. This enables you to look at all your bank accounts and credit cards on just one page. You can split your spending into different categories and see where your money is going.
You can also set budgeting goals and then easily see if you staying within your budget or not.
Hopefully, if you boost your income and budget better, you’ll become someone who always has some spare money left over at the end of the month.
More from Lovemoney:
Top ten ways to make £18 in 30 minutes
Five ways to increase your income
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