Press release -
Payday splurge: Brits double their daily spending on payday Post Office and CEBR reveal UK adults ‘unconsciously spend’ more than £900 of their potential savings every year
-Non-essential spending doubles on payday for a third of Brits (32%)
-Brits spend £56 on non-essential spending on payday and £17 a week on unplanned purchases
-When socialising, those living with housemates face the biggest temptations, spending £132 each week
-Iona Bain from Post Office Money’s Save More Squad provides tips to help people review their personal spending habits and ways to save money
-Post Office Money launches How to Save Money calculator (link goes live Wednesday)
Unconscious spending is impacting people’s ability to save according to new research by the Centre for Economics & Business Research (Cebr) on behalf of Post Office Money1. The findings revealed UK adults spend twice as much on payday (£55) compared to their average daily spend2 (£26).
In order to help understand what triggers people to spend outside of their budget, and realise what habits are limiting their savings potential, Post Office Money has partnered with personal finance journalist and influencer, Iona Bain. Together they want to help those who want to save more understand what their spending triggers are, so they can realise their personal savings opportunity.
Illusion of abundance
Payday creates an illusion of abundance, encouraging people to spend, but by the week before their next payday, many UK adults feel stretched. One in four (19%) will dip into their savings to cover costs, while 28% say they feel like they’re running out of money as they wait to be paid.
Unplanned purchases are one cause of the shortfall at the end of the month. Brits make two unplanned purchases3 on average each week (totalling £25), spending an extra £901 on average each year.
People make bigger purchases at the start of the month, with three in ten (29%) shopping for non-essential items, and a further one in four (26%) booking tickets or planning future social occasions in the first week after payday.
The time of year also impacts people’s ability to save. Unsurprisingly, three in five (61%) people say they spend more around the December, followed by November (24%) and July (20%), due to the summer holiday season. February, March and April are the least likely to be high spending months.
Ross Hunter, Post Office Money comments: “Saving can be hard, as anyone who has tried to stick to a budget knows. However, realising what can trigger your unconscious spending can give you back control and help improve your long-term savings potential.
“We know people are twice as likely to save at the start of the month as at the end, though unplanned expenses can often eat into savings as it comes closer to payday. It’s encouraging that 77% of people review their outgoings monthly, as this is key to understanding your barriers to saving4. We want to help people recognise that little steps taken every day can contribute to their savings pot, so that everyone can realise their own savings opportunity.”
Spending triggers
Payday and certain times of the year are not the only spending triggers people face. People are more likely to spend money after a bad day (20%) and will spend more to make life more convenient (13%), which tends to happen when people are stressed or tired.
Additionally, smartphones make it easier to spend money at any time; a quarter (25%) of weekly spending is done online with one in 10 (8%) admitting they find it difficult to browse online without spending money.
In social situations, different relationships impact people’s propensity to spend. People spending time with housemates spend on average £132 each week socialising with them, compared to £69 who spend when with extend family and £46 with siblings. People who spend time with their parents spend the least at £44 per week on average.
Average weekly spend for a UK adult:
| Item | Amount spent | |
| 1. | Petrol | £17.24 |
| 2. | Eating out | £17.08 |
| 3. | Clothing (offline) | £15.45 |
| 4. | Clothing (online) | £14.84 |
| 5. | Toiletries | £12.52 |
| 6. | Nights out | £10.99 |
| 7. | Lunch | £9.55 |
| 8. | Homewares (offline) | £9.54 |
| 9. | Takeaways (online) | £9.34 |
| 10. | Entertainment (offline) | £9.08 |
| 11. | Homewares (online) | £8.73 |
| 12. | Dating | £7.60 |
| 13. | Entertainment (online) | £7.31 |
| 14. | Taxis | £6.54 |
Iona Bain of Young Money, a blog designed to help young people understand personal finance, comments: “Payday has a huge psychological effect on people, creating an unconscious bias which makes us think we instantly have more money – despite our pay needing to last the whole month! This illusion of abundance is powerful, and subconsciously influences people to burn through their money quicker.
“However, unplanned purchases can really harm our savings potential. Of course, much of our spending is unavoidable, but it really helps to be able to recognise situations where you’re under pressure to spend more. For example, if you know December is an expensive month, then you could try to save more in a specific account the preceding months, so you don’t become too indebted or raid your long-term savings. Or you could chart your online spending to see if it’s excessive and adjust your behaviour if needed. Start with small, easy tweaks - one less takeaway or taxi ride a week, say - and give yourself a month to bed in the changes.
“Knowing what you’re spending is an important part of planning how to save. Post Office Money’s How to Save Money calculator is a way to help you understand where you’re spending your money, and how your monthly expenditure compares to others like you, to help you identify your saving potential.”
Visit the How to Save Money calculator here: https://www.postoffice.co.uk/savings-accounts/how-to-save-money-calculator
ENDS
If you would like to speak to Iona Bain, please get in touch.
1 Opinium Research carried out an online survey of 2,003 UK adults over 18 years old from 22nd – 26th March 2019
2 Average Daily Spend is all spend excluding rent and bills but including food and travel
3 Unplanned purchases are any spend that was unplanned / unbudgeted across an average week
4 Opinium Research carried out an online survey of 2,011 UK adults over 18 years old from 22nd – 25th January 2019
Notes to Editors:
For more information, please contact:
Lily Cunningham, Post Office
Lily.Cunningham@postoffice.co.uk
Twitter @postofficenews
Lansons
0207 294 3638 / 0207 294 3643
About Post Office Money
Post Office Money, launched in January 2015, brings together all of Post Office’s multi-award-winning financial products under one umbrella and seeks to better respond to ever changing customer needs, making sure the Post Office matters even more tomorrow than it does today. Post Office Money is available in branch, over the phone or online.
Bank of Ireland has supported customers in the UK for many decades and provides financial services products to Post Office Money customers.
Winner of What Mortgage award for Best Variable Lender 2017.
About the Post Office
About Post Office: Post Office Limited has an unrivalled national network of over 11,500 branches across the UK, more than all the high street banks combined, and sits at the heart of many communities across the country.
It provides around 170 different services and products spanning financial services including savings, insurance, loans, mortgages and credit cards. Post Office also offers Government services, telephony, foreign currency, travel insurance and mail services.
99.7 of people live within three miles of their nearest Post Office outlet. For many rural communities the Post Office is the only retail outlet. Post Offices remain highly valued and trusted and are the focal point for many communities. For more information, visit www.postoffice.co.uk
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- We sell 170 different products and services spanning financial services including savings, insurance, loans, mortgages and credit cards; Government services; telephony; foreign currency; travel insurance and mail services.
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