- A quarter of UK workers admit they spend up to 25% of their disposable income within 72 hours of being paid
- Half of the UK believe they spend most their disposable income on food.
- The youngest workers spend their disposable income the fastest, but 45-54 year olds rely on their credit cards to get them to payday
A quarter of UK workers admit they spend up to 25% of their month’s pay within 72 hours of being paid and most of this goes on unnecessary purchases. Research conducted by Paymentsense, on 2000 UK workers who get paid monthly, found that 49% of people say they make unnecessary purchases as soon as they get paid.
What do the ‘payday millionaires’ spend their money on?
A third of people say that spend between £41 – £60 on socialising on the first weekend after payday – and half of UK workers believe they spend most of their disposable income on food.
It seems that workers go from riches to rations, with a third of UK employees admitting they change their eating habits towards the end of the month due to being skint. This tendency is always exacerbated in ‘skint January’, where workers were paid earlier than normal in December.
The stereotype women have of being shopaholics seems to be correct on payday – over half of women make unnecessary purchases as soon as they get paid, compared to only 38% of men. Double the number of women than men, also admit to being a payday millionaire and are more likely to use their overdraft every month.
High earners, low spenders
Those with the highest amount of disposable income, over £1500 a month, don’t tend to spend any more than a tenner within the first 72 hours of being paid and those with the lowest amount of disposable income, less than £100 a month, spend 22% of it within 72 hours!
On average, the youngest workers spend their disposable income the fastest – spending almost a quarter of their disposable income within 72 hours of being paid. They also admit to having an online shopping basket ready to be ordered as soon as they get paid. But it seems that we don’t always get wiser as we get older – over a quarter of 45-54 year olds rely on their credit card to get them through the month.
So why is any of this relevant to HR?
The knock on effects of financial woes will impact on every aspect of a person’s life, from their diet to their stress levels – all of which has an impact on their health and wellbeing and their ability to perform well at work.
The truth is, nobody gets taught how to budget any more.
Leading UK benefits companies have all predicted a growth in financial education in 2017 as part of an overall benefits package, as it becomes increasingly clear that guidance is needed. It’s certainly something for HR to think about.