Save, make, understand money

Credit Cards & Loans

Five million UK adults living beyond their means as cost-of-living crisis bites

Emma Lunn
Written By:
Emma Lunn

More than five million adults admit they spend beyond their means for more than half the year, according to a cashback site.

A study by the cashback website found that almost nine million adults (17%) have nothing left in their current account, or are in their overdraft, the day before payday.

The How Britain Spends report highlights the impact the rising prices are having on people’s budgets.

It found the majority of adults surveyed (59%) spend more than they earn for at least a month a year. This is most common for students, with eight in 10 finding themselves in the same situation, and least common for retirees with only 21% doing so.

For parents with children under 18, with school trips, birthdays and bigger food shops to pay for, they spend beyond their means on average for more than a quarter of a year (just over three months).

Adults earning £35,000 a year or less typically spend more than their salary for two months of the year and those earning more than £100,000 a year stretch beyond their means for four months on average.

The report highlights that nearly three quarters (73%), approximately 38 million adults, don’t have their spending fully under control, with almost half (47%) citing the rising cost of living as the cause.

The research also reveals that the average adult has £323 left in their current account the day before payday. Parents with children under 18 have just £179 left in the bank the day before payday, while adults in their 30s have the least at £152. Those in their 70s having the most at more than £1,000.

‘Salaries being thinly stretched’

Adam Bullock, UK director at TopCashback, said: “Our report brings to light just how thinly salaries are being stretched. In the wake of huge hikes, from grocery bills climbing by 41% to spending 24% more on toiletries, it’s no wonder that millions are having to pay out beyond their means so regularly.

“And while the country’s economy is showing slow improvement as we head into Autumn, many are still suffering from the turbulence of the last few years. With the cost of living remaining high, we want to encourage people to be as savvy as possible when they do spend money to make their hard-earned cash go as far as possible.”

The report also reveals that almost half (48%) of adults’ overall spending has increased in the past three months. Essential groceries have seen the biggest increase, with spending rising by 41%, while money spent on other essentials have also climbed, with toiletries increasing by 24% and petrol by 23%.

Beyond this, spending on treats has also risen in the past three months, with money spent on treat groceries increasing by 21%, dinner out by 17%, and skincare by 14%.

Sue Hayward, personal finance expert, said: “Making your money work harder is essential in the current climate, with so many of us budgeting and planning to make every penny count. The fact that people are regularly spending beyond their means is concerning, but sadly not surprising with households facing higher mortgage and food costs, however there are simple steps people can take to get the most from their money.

“This includes making sure you shop around for the best deals and getting the most from loyalty schemes and cashback offers. It’s always worth double checking your bank balance to ensure you’re not shelling out on direct debits for old subscriptions you don’t use, or auto renewing insurance policies.”