Generational Divide in Budgeting Habits

Posted by Tom Magor in Personal Finance on 21 October 2016 - Tom is a Senior Credit Analyst at checkmyfile.

While consumers typically have a lower level of disposable income than has been enjoyed in previous years, it has been revealed that those aged over 55 are half as likely to budget their expenditure, compared to their younger counterparts.

A report compiled by SunLife states that the younger generation are more than 70% more likely to budget than those over 55. A mere 35% of those aged over 55 formally set a budget, representing a 5% reduction since 2015. As a result, almost two thirds don’t plan their expenditure, with 1 in 5 only claiming to have a rough idea regarding their financial situation.

The younger generation are also more likely to utilise technology as part of the budgeting process with a quarter of those aged 18-24 employing either an app or online tool. In contrast, only 3% of over 55s use comparable technology, while a third use a spreadsheet or notebook.

Perhaps due to the higher cost of living, those residing in London are the most likely to devise a budget. 56% of those living in the capital analyse their expenditure, 9% more than the UK average. Londoners are also most likely to utilise technology with nearly a quarter using such tools. In contrast, those residing in Scotland are the least likely to budget with only 40% deriving a detailed plan with nearly 20% stating they only have a rough idea regarding their financial situation.

Ian Atkinson of SunLife says, “It is interesting to see that while overall there is a slight increase in the number of people who are budgeting formally, amongst over 55s budgeting is down while among young people it is up, making that gap between the generations even wider.

“This may just be because there is more technology available to younger people, so using it to budget just comes more naturally, or it could be because they have to watch the pennies. This is a generation that started becoming financially responsible during a recession, are saddled with huge university debt and need to save £33,000 on average just to get on the housing ladder. And now, post Brexit, their financial futures are even more uncertain.

“In comparison, recent figures show over 55s in the UK to be the richest property owners in the world while our research shows they have more than five times the savings of 18-24s (£46,416 on average compared to £9,094 for the 18 to 24s). So it could be that over 55s are not budgeting as much because they don’t really need to.”

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