Credit, Collections & Insolvency News
A new study of the nation’s finances by Zopa has found there is a new group of avers bucking the trend for ‘skint January’, and are instead practising ‘Fruganuary’ by prioritising getting in control of their finances.
More than a third (35%) of consumers have less money the first month of the year than in any other month, with 16% saying that they struggle most the week before the January payday. Overspending at Christmas (38%), increased energy bills (25%) and getting paid early in December (23%) were cited as the most common reasons.
However, contradicting their generational stereotype, almost half (45%) of millennials and 37% of Gen Z say that instead of splurging the cash they take sensible steps in January to avoid going into the red (vs. 31% of general population).
One in five (18%) of Gen Z go as far as to say their savvy financial control means they have even more money in January than any other month, compared to just 6% of the general population.
According to the research by Zopa, when it comes to watching the pennies at the start of the year, millennials have it down – with the average person aged 24 to 39 cutting back a huge £568 simply from small money saving steps – equating to £3.5 billion in savings for just this generation. Those aged 18 to 23 (Gen Z) also manage to save on average £352, whilst the figure dips to on average £314 for Gen X (aged 40-65).
Of those that try to control their finances, the most common methods are not buying clothes (80%), making packed lunches (77%) and not getting takeaways (76 per cent). However, some methods are more effective financially – the average 24 to 39 year old that takes part in dry January saves £79.17, and a further £72.40 doing Veganuary. By taking a few small steps, the research found that consumers would save an average of £391 throughout January alone.
The Zopa data looked at the average savings that people made from each individual ‘Fruganuary’ tactic, and found the 10 most efficient were:
Although the majority of Gen Z and millennials (95 and 89 per cent respectively) say they want to carry on these habits for the rest of the year, most fall by the wayside after an average of five months. But if positive money saving measures continued throughout the year, consumers would save an average of £4,692 and by 2030 could have banked a whopping £46,920.
Clare Gambardella, Zopa’s Chief Customer Officer, said “January is often considered to be the time when our finances are in worst shape, but our research shows by taking control, some groups manage to create positive financial habits at the start of the year.”
“For anyone looking to improve on their financial position this year, the Zopa app can help people along this positive path as its Borrowing Power function helps to improve credit health, provides actionable insights to increase credit scores and unlocks great value loans for those that need them.”