Research from KPMG UK finds 23% of people in the UK spend more than half their income on the day it is paid into their account. Utility bills, housing costs, and credit card or debt payments make up the top three most common payday outgoings for the UK public at large.
Perhaps unsurprisingly, over half (52%) of people in the UK are forced to source extra cash to see them through to their next payday with most turning to credit cards (21%), overdrafts (13%) and borrowing from their partner (12%).
Lisa Fernihough, Head of Financial Services Consultancy, KPMG UK says:
“With over half of the people in the UK forced to rely on extra cash to keep them afloat for the month, clearly either income, lifestyle or financial literacy is far from where it needs to be. For 14% of the UK, one of their biggest expenditures in the month is paying off loans. Fintechs are currently offering solutions that can help consumers avoid or manage debt. As consumers gain confidence with this sort of technology I hope to see these numbers improve.”
Millennials are the worst affected with 29% spending more than half their income in one day. Further, whilst the average person in the UK spends around 31% of their earnings on payday, millennials are spending 37%.
Those aged 18 – 24, so likely to be just entering the work force or heading to University, are five times more likely to end payday in the red than the national average. Nine percent of this age group also say a ‘payday treat’ makes up one of their most significant expenditures within 24 hours of getting paid, nationally just 2% of people said the same.