Do you rely on credit because your wages don’t last the month? If the answer’s yes, you’re not alone. Here’s how quickly the average Brits spends their wages, and how you might manage your money a little better.
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How long does the average UK wage last?
According to new research, the average UK wage doesn’t last long. Credit and debt management company Lowell looked into how quickly Brits spend their monthly wage. The results are certainly eye-opening.
- Almost one in 10 of us spend at least 60% of our wages in the first week alone. That means many of us could be struggling financially just a few days after payday.
- In Leeds alone, residents spend an average of 51% of their wages within the first week.
- On the flip side, Brighton residents spend the least, with residents spending an average of 39% of their monthly wage in the first few days.
Why are we burning through our paychecks so quickly? Well, there’s no single explanation, but some reasons might be:
- Many people set up direct debits for bills to coincide with their wages. So, if you get paid and all of your bills come out in the days that follow, you could spend a fair chunk of your wage very quickly.
- If you have high monthly outgoings, whether it’s credit card bills or loan payments, you’re already spending a high portion of your salary on the essentials.
- Some people like to splurge after payday, which leads to spending money rather than saving.
How many of us are saving our wages?
Speaking of saving money, how many of us actually put money away each month into a savings account? The answer’s worrying. According to the research, 24% of us never put any savings away! That’s almost a quarter of Brits who don’t save money regularly.
One of the main explanations for this is that some of us simply don’t have the cash left over to save. However, not only does saving money help you build up an emergency fund to cover unexpected expenses, but it also allows you to make larger purchases without relying on credit or taking on new debt.
How many of us actually rely on credit, though, and is credit a bad thing? Let’s take a look.
Why are we turning to credit?
It all comes down to living from paycheck to paycheck. If you can’t afford to save money and you’re struggling just to cover the essentials, you might need credit to tide you over until your next payday.
The problem? Well, there’s more than one issue with relying on credit too much, actually:
- If you take on more credit than you can manage, you could miss repayments and damage your credit score. This makes it harder to find loans and credit cards in the future when you might need them.
- If you have a credit card and you don’t repay the balance each month, you’ll pay interest on what’s outstanding – which quickly adds up.
- It’s tempting to overspend if you have credit available, which means you’re less likely to save money or pay down debt.
Ultimately, if you rely too much on credit, you’re spending more than you can afford. Overextending your finances causes money worries, which can lead to debt down the line.
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How can I stop relying on credit?
To be clear, credit isn’t a bad thing. In fact, having a credit history is important if you want to find a mortgage or get car finance. It’s only a problem when you have more credit than you can handle, which causes money worries. So, if you’re struggling to make your wages last, here are some tips for managing money more Foolishly (not foolishly!).
- Set a savings goal, however small. Having a target in place will help you stay focused on saving.
- Look at what you use credit for. If you use a credit card to buy non-essential clothes, for example, maybe cut back on the extra spending for a few months and pay down your debt instead.
- Check out the special offers when you do your supermarket shop. Sometimes, you can get essential items like soap or toilet paper cheaper if you simply opt for a different brand.
- Explore whether switching from a high-interest credit card to a 0% balance transfer credit card could save you money on interest payments.
Finally, you can always reach out to an organisation like Citizens Advice if you have debt worries.
