How much of your pay is left?
New research by pensions advice specialist1, Portafina, has investigated the spending habits of the country; unveiling that Brits in full-time work spend a fifth (21%) of their disposable income within 24 hours of being paid.
Comparing the 2019 research to the results of the same study from 20172, the data from Portafina reveals how much disposable income is blown after payday and how the nation’s payday millionaire spending habits have changed during a period of financial insecurity2.
The average full-time worker in the UK is now left with a disposable income of £714 a month, up 27% from £560 in 2017. However, despite having more of it, the nation is, in fact, being more cautious with its money straight after payday, compared to two years ago.
The research shows that working Brits are better at budgeting their cash right up to payday than previously. Workers are able to enjoy an average of 24% of their disposable income in the last week before payday, compared to just 12% in 2017, highlighting that the nation is taking steps to better manage spending throughout the month.
The new findings reveal that in 2019, UK adults spend an average of 21% (£150) of their disposable income in the first 24 hours of getting paid (compared to 43% – £241 – in 2017), and an average of 30% (£214) in the first seven days – that’s 51% less spent than in 2017 (£454).
However, 25-34-year-olds are the most likely to indulge in the ‘payday millionaire’ lifestyle with 16% of Millennials spending more than 50% of their disposable income in the first 24 hours of getting paid, compared to 17% in 2017.
Jane Evans, The Lasting Life Change Coach commented on the research:
“For so many of us, payday means reward day! Working hard it makes sense to treat ourselves with that longed-for new gadget, break, or outfit. After all, we’ve been getting some helpful reminders in our emails and pop up ads of just how much we deserve it.
“Before long this slips into becoming a habit because we get caught in a reward-loop. The anticipation releases chemicals in our system that feel good and the excitement builds with the feel-good sensations. We finally hit the buy button and float about temporarily in a state of contentment. Unfortunately, it may not last. Because as the ‘dopamine hit’ dwindles we seek a new payday treat. Realising this doesn’t mean no more payday treats but having awareness and knowing we literally get a chemical pay off as well as the financial one can help us pause, breathe and just be extra sure this is the right time to press buy.”Jane Evans
When it comes to what people are doing with their hard-earned cash, promisingly, adding to their savings comes out on top, with earners putting an average of 17% (£118.60p/m) of their disposable income into savings every month.
Breakdown of how UK workers are spending their disposable income
- Put into savings £118.60 p/m – (£3.00 increase from 2017)
- Holiday/travel £92.10 p/m – (£21.10 increase from 2017)
- Shopping (not clothes) for yourself £83.70 p/m – (no change from 2017)
- Eating out £66.00 p/m – (£3.80 increase from 2017)
- New clothes for family/children £65.20 p/m – (£18.40 decrease from 2017)
- Treating the kids £62.80 p/m – (£49.60 decrease from 2017)
- Unexpected costs (e.g. car repairs) £62.00 p/m – (£4.70 increase from 2017)
- Things for the house £60.70 p/m – (£3.00 increase from 2017)
- Drinking in bars/pubs £59.20 p/m – (£1.50 increase from 2017)
- Going on days out (e.g. entry to zoo/stately home etc) £56.50 p/m – (£7.80 increase from 2017)
Commenting on the findings, Jamie Smith-Thompson, Managing Director of Portafina said:
“The fact that as a nation on average we now have double the amount of money left in the bank as we reach payday compared to two years ago is really encouraging. Budgeting doesn’t have to mean boring, and the further you can make your money go, the better. And spending wisely is clearly not holding Brits back as we make sure there’s enough in the pot to enjoy ourselves too.
“One of the biggest changes in spending habits has come from working parents who are choosing to spend considerably less on clothes and treats for their children than two years ago. More money is now being spent on making memories together, whether that’s taking a holiday or enjoying days out with friends and family. And rightly so! These memories are sure to last much longer than materialistic items.
“It’s also encouraging to see that better budgeting has meant savings remain the number one destination for our disposable income. Whether you’re saving for a rainy day, an emergency or your future, it’s always best to pop the money into your savings as soon as you get paid. And whatever your reasons for putting money away, being financially prepared will help reduce any stress and worries further down the line.”Jamie Smith-Thompson