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Do you worry about running out of money?

Do you worry about running out of money?

Category: Money

Updated: 24/04/2017
First Published: 15/10/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Money issues top the list of many people's worries when it comes to things that keep them awake at night, but it seems that this stress doesn't ease when the latest paycheque comes in. In fact, one in 10 workers have been found to start sweating about their finances as soon as their latest payslip is cashed in, so if you find yourself worrying about running out of money, you are in good company.

Money worries

According to the latest Disposable Income Index from Scottish Friendly, most people reach a "payday mayday" around seven days before their payslips are due. This is the time when last month's salary is a distant memory and bills, debts and other living costs have taken their toll on the current account.

However, the Index also found that many started to hit the panic button far earlier than this, with one in 10 workers fretting about their finances at the beginning of the month, when the latest paycheque should temporarily allay any financial pressures. The survey found that the biggest worriers were in Northern Ireland and East Anglia, while those living in the East Midlands were the least concerned, with 43% even saying that they never worried about money.

One factor behind the fear of running out of cash could be attributed to overspending. The Index found that one-third of respondents admitted to splashing the cash a little too zealously, which subsequently squeezed their budgets for the rest of the month.

However, other workers are finding it hard to make ends meet even when living within their means. "Reckless spending and poor budgeting may account for some people falling slightly short of money before their payday, but the real concern here are the swathes of people who live frugally enough, but are still struggling to manage their outgoings,"commented Calum Bennie, communications manager at Scottish Friendly.

In these cases, debt seems to play a major role with the younger generations feeling the effects particularly keenly, with 21% of 18 to 24-year-olds saying that paying off debt was a prime financial concern.

"Our report highlights a large proportion of people – almost one in five adults – are focused on paying off debts. Although commendable, it stands to reason that much of people's disposable income is eaten up in this way," says Calum Bennie. "It can become a vicious cycle, where people struggle to pay off debts each month while trying to get through the month without borrowing more."

Rising prices

Matters are not likely to be helped by the constant price rises that have been witnessed over the last few decades, either. Living costs are now pricier than ever, and things that were once easy to take for granted now have a whopping price tag.

Online estate agent eMoov set out to discover exactly how high prices have risen by comparing today's costs with those found in 1974, and some of the results are enough to make your eyes water.

Back in the 1970s, a pint of lager would set you back a mere 20p, which is a far cry from the hefty bill of £3.19 that you may encounter today. A packet of 20 cigarettes would also only set you back by 20p back in 1974, but 40 years on and the price has risen by a staggering 4,370%.

Going to the cinema used to be a cheap pastime, with a ticket only setting you back 45p, but now you're more likely to shed out £9.60 to catch the latest blockbuster, with tickets in London's Leicester Square taking £15 out of your wallet.

Essentials have also witnessed a rapid rise, with a dozen eggs now costing around £1.95, when the cost used to be a measly 32p. Meanwhile, the price of a pint of milk has seen a price rise of 1,089% in the last 40 years.

While wages have indeed risen over the same period (from £32 a week to £517), the rise has been dwarfed by the price rises of other commodities and especially housing. Over the 40-year period, house prices have rocketed by a massive 1879%, which has made the gap between wages and house prices widen across the period. It's therefore perhaps not that surprising that UK workers have had to tighten their purse strings.

Keeping your budget under control

If money worries plague you, now is the time to do something about it. If you are guilty of overspending, sit down with your bank statements and start formulating a budget. Identify all the treats and unnecessary costs you rack up every month and try to cut them down or forgo them altogether. This can be tough, but getting your finances back into the black will be the biggest treat of all.

Debts on credit cards can be a major worry if you are struggling to pay them off. If this sounds like you, why not think about a 0% balance transfer card? These cards can be a useful way to consolidate your debts. Check out our best buys to explore your options.

Another way to ease your financial woes is to build up an emergency fund. This can be a tough thing to do, but putting aside even small amounts could mean that you have some cash to fall back on when you really need it. Find the best home for your emergency fund by taking a look at our top savings accounts.

If you often find yourself dipping into your overdraft, now may be a good time to see if there are any better deals out there. Finding an account with lower charges on authorised overdrafts could help you cut your costs and clear the debt more quickly. Start your search by looking at our top overdraft accounts.

Whatever you do, don't keep quiet if you are struggling. Talk to your bank, suppliers or providers and they may be able to help you formulate a payment plan that can clear your debts in a manageable way.

What next?

Find the perfect easy access account for your emergency fund

Search the best current accounts with an overdraft facility

Check out the top 0% balance transfer cards

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.