The cost-of-living and its impact on different age groups
Mental health worsens for half of 16-34 years old
As part of their cost-of-living statistics report, the experts at money.co.uk sought to investigate the current cost-of-living’s impact on different age groups. To do this, they compared the effect on their mental health, along with other factors like their biggest financial concern, childcare costs and reliance on benefits.
Young people are struggling the most with cost-of-living crisis
Six in 10 of those aged 25-34 have suffered due to the cost-of-living crisis, with 2 in 5 having monthly bills as their biggest financial concern. When it comes to combating rising costs, 43.58% cut down on their food shop and other essentials, while 4 in 10 (38.55%) use less energy in their homes. 1 in 5 parents aged 25-34 reported an increase of £50 to £100 in their monthly childcare costs, the most of all age groups. This suggests why 10.34% have received childcare benefits in the last year.
To pay everyday bills, 1 in 4 (24.86%) 25-34 year olds had to rely on a credit card, the most of any age bracket. However, 18-24 year olds pay the most for their credit cards each month – 65% more (£1,088) each month.
Over half (56.29%) of the youngest age group, 16-24 year olds, have had their mental health impacted, with 1 in 8 (13.25%) severely suffering, the most of all analysed. 1 in 4 (24.17%) are concerned with personal savings, and 1 in 5 (20.53%) use them to cover the cost-of-living. Also, 26.12% have borrowed money from family or friends, the most of any age group, and 51.99% claim government benefits.
52.27% of 35-44 year olds’ mental health has been affected by the cost-of-living. 46.83% are concerned about their monthly bills, which is likely because they reported the highest increase in their monthly bills on average (£87.46). At 13.90%, they are also more worried about mortgage repayments than any other group. 1 in 5 (20.24%) used their overdraft to pay for bills, the highest analysed. Monthly dependent care expenses are highest for this group, and 48.58% more (£154.27) than over 55s (£103.83).
Older people are less likely to struggle in the cost-of-living crisis
4 in 10 (40.55%) of 45-54 year olds have had their mental health affected. 1 in 5 (21.65%) have had to dip into their savings, and have had their monthly bills increase by £81.52 on average – the second highest after 35-44 year olds. Interestingly, one in ten (10.63%) of this age group have relied on government support to pay their bills in the last year.
Those 55 or older have struggled least with the cost-of-living crisis. In fact, only 1 in 4 (25.12%) were affected at all: less than half the amount of 25-34 year olds (60.89%). People older than 55 are least reliant on benefits, with 1 in 5 (20.34%) requiring government assistance. However, over 55s have experienced the smallest pay rises in the last year, at 3.03%, a 5.43% smaller increase than 16-24 year olds (8.46%).
James Andrews, personal financial expert at money.co.uk, gives guidance on how to manage your finances to reduce stress:
“Money concerns change depending on your circumstances, but almost all of us will have to cope with stress around our personal finances at some point. Putting together a comprehensive budget, letting you see all your income and outgoings in one place, is really useful for relieving stress and reducing spending in the long run.
“Even if it doesn’t have all the answers, this lets you get a clear picture of what’s going on and what needs to change for you to be able to balance the books again.
· Work out when your bills are due. If all your bills are monthly, keep track of what day of the month they’re made. If they’re not all made on the 1st, it’s important to know when all your upcoming payments are due, to avoid overspending.
· Track your spending. Budgeting isn’t just about the big bills like mortgages, rent, and insurance. Make sure every payment is accounted for: tracking how much you’re spending on things like transport, streaming, and even very small expenses like coffees can be the secret to saving extra cash.
· Be accurate. Try not to estimate figures where you can – if you can’t help it, it’s always better to overestimate rather than underestimate.
· Cover the full year. Having a perfect budget set up for a single month isn’t much use when a quarterly or annual bill drops unexpectedly. Other annual expenses, like TV licenses, home insurance, council tax, and even extra spending around Christmas or the new school year should also be included if possible.
· Consider talking to a professional. If you’re worried about your finances, there are several not-for-profit organisations who can help talk things over and offer some security. StepChange and Mind are both dependable examples.
If you’re spending more than you’re earning, then seeing these figures altogether can help to find places to cut back and help keep your finances stable. However, if you’re earning more than you’re spending, that doesn’t mean a budget can’t be useful: you still may be shocked by some of the places your money ends up, and could find some easy ways to help add to your savings or investments.”