Young people across the UK are slashing spending to make ends meet at the start of the year, according to the latest Lloyds Banking Spending Power Report.
In the monthly Ipsos MORI survey of over 2,000 bank account holders in the UK, 60% of all consumers say they have changed their eating and going out habits since the start of 2018. Over half (54%) also claim to have made changes to purchasing habits, of which 34% have reduced spending on clothes and personal care items, and 1 in 5 (20%) are turning to voucher codes and discount websites. The average consumer claims to have reduced spending by £21.53 a week since the beginning of the year.
However, it’s younger people who are taking the lead in cutting back whilst baby boomers continue to splash the cash. Taking the use of voucher codes and discount websites, 27% of 18-34-year-olds claim to have used them more than in each of the previous three months, compared to less than a fifth (17%) of 35+ year-olds. As well as savvy spending, a third (33%) of 25-34 year-olds have taken to eating in rather than going out to restaurants, which is significantly higher than the proportion of those aged 35+ who claim to have done the same (25%).
It’s clear that the younger generations are feeling the squeeze at the turn of the year and this is reflected in their main worries for 2018. When asked to select their top 5 concerns for the coming year, 18-34-year-olds included ‘making ends meet’ and ‘inflation’ alongside ‘Brexit’ and ‘the NHS’. For over 35s, Brexit was their top concern, with inflation and making ends meet not appearing in their top 5.
Robin Bulloch, Managing Director of Lloyds Bank, said “It is clear that many young people are concerned about the pressure on their finances in 2018 and are looking at ways to reduce their outgoings. 36% of 18-34-year-olds are worried about making ends meet, so it is encouraging to see that our survey shows young people are making a real effort to watch what they spend.”
Away from the age divide, this month’s survey shows consumers are more concerned with the state of the UK economy than they were a year ago. From January 2017, pessimism towards the UK housing market and inflation has risen 8 percentage points and 13pp respectively. This may have impacted people’s perception of their own financial strength, as only 1 in 5 think (22%) they will have more money in 6 months’ time. Amongst this group, however, spending is not the priority with around 40% using some of this extra cash to pay off existing debt and 3 in 4 (74%) saving for a rainy day.
Meanwhile, Lloyds Bank’s analysis of its own customer account data showed that people continue to spend more on essentials. The year-on-year growth in consumers’ essential spending for December was around 3%. Food, accounting for c.40% of all essential spend, had a year-on-year rise of just under 2% and fuel spend rose by just over 4%. Gas and electricity also rose to just over 4%, the sixth consecutive month of spending increase, following over three years of continuous decline.