Many people count down the days until payday for payday treats. They live paycheck to paycheck and scrape by on the last few days of the month. It’s common to overspend on payday. After all, retail brands target consumers with exclusive payday discounts and perks. We buy new clothes, go out for dinner and enjoy one weekend of luxury. Only to spend the rest of the month counting our pennies and struggling to pay the bills. In this blog, you will know about Payday treats: What do we spend our hard-earned money on.
Payday is a tricky one, especially for the younger generation and for payday treats. In 2018, the Resolution Foundation named UK millennials the “second worst-hit financially in the developed world.” With two recessions under their belt, it’s no surprise that UK millennials are having financial difficulties.
Prepaid card specialists, Suits Me, surveyed 1000 UK adults about their payday spending habits. They found that we spend a whopping 21% of our disposable income on payday, averaging £132. A takeaway and drink out are the most common payday treats, followed by designer clothing and shoes. Londoners are most prone to a payday splurge, while the South West is a little more careful with their money.
Here are a few tips to make sure you don’t go overboard with your payday spending.
Plan for entertainment
You need a budget for entertainment throughout the month. Many people are too optimistic when planning their budget and decide not to have an entertainment category. You need to look at your spending habits realistically. If you spend £200 on entertainment every month, you could start to cut it down by 10%. Plan for entertainment but be a bit more frugal with your funds. You could opt for a more affordable restaurant instead of a five-course meal. If your budget is unrealistic, you will not stick to it.
Pay your bills on payday
Always pay your bills on payday, or put the bills money into a separate account. You can set up standing orders for each bill to come out of this account. You don’t need to worry about saving money for bills at the end of the month because they’re all taken care of.
Putting the leftovers into your savings account is one of the most common budgeting mistakes. You need to pay a portion of your wage into your savings on payday. Usually, you should save around 15% of your monthly wage. Of course, if your rent and living expenses are sky-high, it might be more like 5%. Do not leave savings until the end of the month.
Know your weaknesses
We all have our spending weaknesses. You might be tempted by seasonal sales or delicious meals outs. Allocate a portion of money for this weakness so you can still indulge throughout the month. You will be less likely to make a huge impulse purchase if you know you can make a smaller one and stay within budget. Manage your temptations and make your budget realistic.
Update your budget
Your first budget plan will probably be inaccurate. Most of us underestimate our spending habits. Go through the last three months of your accounts and track your spending on food, entertainment, bills, rent and savings. It’s normal to be completely outraged at your spending.
Make a budget on these numbers and try to cut down on categories where you can. For example, you could spend less on food by shopping at Aldi instead of Waitrose.
Outline your budget on payday, so you don’t spend too much at the start of the month.