One in four young Aussies run out of money before their next payday

New data has exposed a grim truth lurking in the bank accounts of one in four Aussies aged under 43.

New data has revealed one in four young Australians are often running out of money before their next payday as they navigate the complexities of managing their finances.

Research conducted by ubank found 25 per cent of Gen Z and Millennials always or almost always ran out of money before their next payday.

Ubank chief product and growth officer Andrew Morrison said despite their best efforts, the challenge of balancing daily expenses, bills and savings led to situations where young Aussies were coming up short most months.

Mr Morrison said even when young Australians used traditional budgeting measures, financial pressures including the cost of living, halted their chances of success.

One in four Australians aged under 43 years always or almost always ran out of money before their next pay check came in. Picture: NewsWire / Nikki Short

The bank found of the 74 per cent of Gen Z and Millennials who used budgeting measures about 30 per cent used traditional budgeting and 27 per cent preferred the pay-yourself-first process and would put aside a portion of their income for savings and investments before paying bills.

About 24 per cent of young Australians used the 50/30/20 method, allocating 50 per cent of their budget to essential expenses, 30 per cent to discretionary spending and 20 per cent to savings and debts.

About 15 per cent of Australians aged under 43 years accounted for every dollar they earned so their income minus expenses equalled zero.

Mr Morrison said ubank recognised these challenges and provided solutions to help younger Australians manage their finances more effectively.

About 74 per cent of young Australians use some form of budgeting method to help them save and spend. Picture: NewsWire / Nikki Short

The bank has introduced a new functionality on its app allowing customers to see their money in the context of their pay cycle so they can manage their cash flow and have a clear picture of their financial situation at any given time.

Another feature allows people to put aside money for bills each pay cycle to make sure they have funds allocated for their expenses.

“Ubank customer insights found the main pain points when it came to money management were saving money (66 per cent), knowing how much is left after bills and savings (37 per cent) and knowing if bills are covered (33 per cent),” Mr Morrison said.

“Managing daily spending, bills, and saving for life’s bigger goals is challenging, especially for younger Australians.

“Many customers make trade-offs to stay on track but need that extra support when it comes to good money management.”