Despite a slight annual increase in the number of people who formally budget, 53% still don’t, and 17% still have either no idea or only a ‘rough’ idea about the state of their finances, according to research from SunLife.
According to the firm’s annual Cash Happy report – which looks at the day to day finances of 3,000 UK households – 47% of people now budget formally compared to 45% last year and the number that only have a ‘rough idea’ or no idea has dropped from 21% to 17%.
However, while overall formal budgeting has gone up – which is good news because people who budget are happier than those that don’t – the number of older people (over 55s) that budget has fallen from 37% to 35%.
In 2015, Cash Happy revealed that young people (18-24) were the most likely to keep close track of their finances, with 59% saying they formally budget -this has now increased to 60%. So while last year, the under 24s were 59% more likely to budget than the over 55s, now, young people are 71% more likely to budget.
Furthermore, 18% of those aged 55 and over admit to having either no idea or only a rough idea of their day to day finances and for the 45-54 bracket, it is 21%. But fewer 18-34s admit they have either no idea or only a rough idea – just 14%.
And when it comes to method, a quarter of those aged 18-24 use either an app or online tool to budget, by far the most popular method. In comparison, just 3% of the over 55s use an app or online tool (a slight increase on last year’s 2%) while a third use a spreadsheet or notebook.
Those most likely to budget formally live in London, where 56% do – 9% more than the UK average – and a further 39% say they do budget, but informally. Londoners are also much more likely to use technology to budget with 23% using a phone app or online tool. In contrast, only 5% of people in East Anglia use an app or tool while almost a third use a notebook.
Those least likely to budget are the Scots, where only 40% budget formally and 19% say they only have a ‘rough idea’. However, the number that do no budgeting at all is very low – just 3%, compared to 6% in London and the West Midlands and 7% in Wales.
Ian Atkinson, head of brand at SunLife said: “it is really encouraging to see a slight increase in the number of people who are budgeting formally. It is particularly good to see younger people taking such a healthy approach to their finances.
“This may just be because there is more technology available to them so it just comes more naturally, or it could be because they have to.
“This is a generation that has seen a great deal of financial uncertainty in their adult lives, so it is no real wonder they are keeping close tabs on their spending; universities currently charge up to £9,000 a year in tuition fees, with the cap increasing to £9,250 next year, while first time buyers need to find a deposit of almost £33,000 on average to get onto the housing ladder and now, post Brexit, their financial futures are even more uncertain.
“While in comparison, over 55s are budgeting less, but they are also better off than 18-24s with more than five times the savings, so it could be that they are not budgeting because they don’t really need to.
“Whether you prefer the old fashioned method of pen and paper, or like to let technology do the maths for you, Cash Happy shows that those who budget in some way, either formally or informally, are happier than those that don’t, so it is worth keeping on top of your finances, not just for your financial well-being, but your personal happiness too.”