Budgeting is a cornerstone of Financial Planning, but more than half of us still don’t take this basic step.
Despite the importance of budgeting and the fact it makes us happy, there has only been a small rise in the number of us who do.
New research by SunLife found that, despite a small increase over the past year in the number of people who formally budget, 53% still don’t.
A rather worrying 17% still have either no idea or only a ‘rough’ idea about the state of their finances.
Their latest annual Cash Happy report found 47% of people now budget formally compared to 45% last year.
This finding was based on an analysis of the day to day personal finances of 3,000 UK households.
However, while overall, formal budgeting has gone up – which is good news because people who budget are happier than those that don’t – the number of older people (over 55s) that budget has fallen from 37% to 35%.
In 2015, the Cash Happy research found that young people (18-24 years old) were the most likely to keep close track of their finances, with 59% saying they formally budget -this has now increased to 60%.
So while last year, the under 24s were 59% more likely to budget than the over 55s, now, young people are 71% more likely to budget.
Furthermore, one in six (18%) of those aged 55 and over admit to having either no idea or only a rough idea of their day to day finances and for the 45-54, it is one in five.
But fewer 18-34 year olds admit they have either no idea or only a rough idea – just one in seven.
And when it comes to method, a quarter of those aged 18-24 use either an app or online tool to budget, by far the most popular method.
In comparison, just 3% of the over 55s use an app or online tool (a slight increase on last year’s 2%) while a third use a spreadsheet or notebook.
Ian Atkinson, of SunLife said:
“It is really encouraging to see a slight increase in the number of people who are budgeting formally. It is particularly good to see younger people taking such a healthy approach to their finances.
“This may just be because there is more technology available to them so it just comes more naturally, or it could be because they have to.
“While in comparison, over 55s are budgeting less, but they are also better off than 18-24s with more than five times the savings, so it could be that they are not budgeting because they don’t really need to”.
“Whether you prefer the old fashioned method of pen and paper, or like to let technology do the maths for you, Cash Happy shows that those who budget in some way, either formally or informally, are happier than those that don’t, so it is worth keeping on top of your finances, not just for your financial well-being, but your personal happiness too!”
