Workers spend salaries 'by the middle of the month'

20/04/2009

The Co-operative Bank said today that the typical worker has spent all of his or her salary by the 20th of each month - leaving another ten or so days for them to go into their overdraft or build up debts.

According to the new data, a majority of Brits spend £80 of the typical £1,580 monthly wage within 24 hours of their salary entering their bank account - a total that rises to £228 by the following day.

On average, half of the money is gone within 11 days, The Co-op said.

Common ways of making ends meet when salaries are spent include credit card and personal loan-based spending - which tend to carry high interest rates and therefore have the potential to greatly increase debt.

John Barker, head of current accounts at The Co-op, said: "The research shows that many people are still looking to go out spending straight after being paid every month, but with the current economic downturn, it clearly leads to a much more difficult time later when many cannot get their wages to stretch until they are next paid.

"In the present economic climate developing a household budget is essential to keep spending in check and to identify ways costs can be trimmed."

Also commenting on the new salary statistics, EuroDebt director Kevin Still said: “In the current economic climate it is prudent for everyone to practice daily or weekly budgeting, knowing exactly when standing orders and direct debits leave your account so that adequate funds are made available.

Bank and credit card charges for going over overdraft and credit limits can be very expensive and cause future problems if not addressed quickly."

He added: Keeping a visible calendar for other annual and quarterly costs is important, as insurance premiums, car MOT, road tax and other lump sum payments can come at awkward times, but are a legal requirement. Budgeting need not be difficult whether you are using a notepaper pad and pencil or an Excel spreadsheet.”

The Co-op's research suggested that around ten per cent of people "never" open their bank statements - meaning that they do not know about whether or not they are approaching their overdraft limit.

Tags; Budgeting Advice, Recent Graduate Debt, Credit Card Lifestyle, Young Family Finances,

• Share
• 
• 
• Store
• 
• Follow
•