How good are YOU with money?

Here we take a closer look at how the different generations fare when it comes to money management.

By Nicole Hamer |

09:16 26 April 2013

When it comes to being care-free spenders, young people in their 20s tend to suffer the worst reputation. After all, this is the age where costly new clothes and nights out are high on the agenda.

 

At the same time, their incomes tend to be low - many 20-somethings are only just starting out in their careers, for example, and might still be repaying university debts. They could also be moving away from the family home for this first time and having to budget for their own rent and bills.

But a recent survey by Halifax has found it isn't actually this age group that struggles most with its cash.

Here we take a closer look at how the different generations fare when it comes to money management.

 

If you're in your 20s

 

According to Halifax, 50% of those in in their 20s admitted to running out of money before the end of the month at least once during a year, while 11% said they ran out of money every single month before payday arrived.

However, more than two thirds (68%) of those in their 20s say that if they do have money left at the end of the month, they will save it. In fact, this is the most likely group to do so if you take households in their 60s and 70s out of the equation.

 

Top tip! Start an easy access savings account

The Halifax research implies that if 20-somethings CAN save, they will. In this case, finding the best-paying savings account makes sense. A good place to start with interest rates generally so low is with a cash ISA, where you won't be charged tax on the interest earned. You can save up to £5,760 into one of these accounts for the current tax year and the good news is that it only started on April 6, so you have plenty of time to reap the tax-free benefits. 

You can have look at what deals are available here but bear in mind if you can't afford to lock your money away, you should opt for an easy access ISA.

 
If you're in your 30s and 40s

 

The Halifax research showed that, despite having more experience, by the time you have reached your 30s and 40s, your ability to manage money has taken a turn for the worse. Of the 30 and 40-something generation, 58% and 57% respectively said they ran out of money before the end of the month at least once in the last year. And 10% of those in their 30s, and 11% of those in their 40s said they ran out of money EVERY month.

Anthony Warrington, director of personal current accounts at Halifax, said: "It's perhaps a symptom of the current situation that more people in their 30s and 40s are finding they are running out of money before the end of the month. There is no easy solution but keeping a close eye on your finances and budgeting can help."

 

Top tip! Switch to a cheaper mortgage deal

If you're starting a family in your 30s and 40s, expenses are likely to go up and - if one of you gives up work - your income could also halve at the same time. On top of this, you could also be in the early stages of paying off your mortgage.

In this case, make sure you are on the best mortgage deal as you can potentially free up hundreds of pounds a month. For example, the average standard variable rate is now 4.4%, but you can get a rate of as low as 1.79% fixed for two years if you have a 40% deposit. Shop around on our mortgage channel to find out more.

 

If you're in your 50s and 60s

 

By the time you're in your 50s and 60s, money management skills appear to have improved, according to Halifax's research. Its revealed that more than half (55%) of those in their 50s never ran out of money  at the end of the month the whole year through, and for those in their 60s, this figure was even higher at 72%.

But not everybody in this age bracket is the perfect budgeter. A fifth (20%) of those in their 50s and 14% of those in their 60s, still claim that their monthly household funds have dried up by the end of the month on at least two occasions during the year, although only 8% and 5% respectively run out of money every month before payday.

 

Top tip! Sign up to online banking

Monitoring your bank account online will enable you to keep a much closer track of what's going in and out of your account. So, if you haven't already, sign up to online banking. If you have a smartphone, you can take even more control by downloading your bank's app if it offers one, and see the real state of your finances at the touch of a screen (and in the cold light of day) wherever you are.

And if you haven't got a smartphone, Halifax and several other banks such as Lloyds TSB and First Direct also offer text alerts to their customers free of charge. These will let you know if you are getting close to your overdraft limit - or even just what your balance is and latest transactions are.

 

If you're between 70 and 75

 

Hit from all sides with poor savings rates, rocketing heating bills and a dwindling value of pension pots, the 70-75 year old age group should be in line to struggle the most with their finances. But, according to the Halifax research this is the generation that is actually the best at managing their money. A whopping 87% of this age group never run out of cash at the end of the month, while just 2% run out every month.

 

Top tip! Get online for money-off deals and vouchers!

While you may qualify for senior citizen concessions when it comes to travel fares and some entrance fees, plenty other of expenses that you will have to pay full whack for can be reduced simply by using money off vouchers. 

Log onto our deals and vouchers channel, type in what you want a voucher for - whether it's a restaurant, cinema or even supermarket - and, if one is available, it will return a code that will secure you a discount. In other words, you have everything to gain and nothing to lose.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.