A new study of 1,000 UK adults, from digital financial coaching app Claro Money, has revealed that 28% of Brits are dipping into their ‘rainy day’ funds just to make ends meet when their outgoings rise above their income.
Rather than use their savings funds for goals like luxury holidays, remodelling the family home or a brand-new car, research has found that the rising cost of daily living including food shopping, childcare, petrol, and energy are starting to eat away at Brits’ future finance goals and plans.
The study found that men are more likely to reach into their savings account, with nearly a third (31%) choosing their savings over going without, cutting costs elsewhere or working overtime.
However, in contrast, 39% of women would rather cut back on their spending first before they turn to their savings fund as just over a quarter reluctantly tap into this (26%) to meet bills. The older generation of 55–64-year-olds were the most likely to choose to chip away at their savings when times get tight.
Over a third (34%) of those aged 55-64 years old will choose their savings to help meet costs. Pensioners, aged 65 and over, were the next age group looking at their savings funds to cover the gap when the cost of food, heating, petrol, and energy creeps up.
Savings aren’t the only option available to Brits for helping to make ends meet though. One in five Brits (15%) will choose to sell something they own to make up the shortfall, with working overtime being an option for an eighth of Brits (12%).
Credit cards are also utilised by Brits as a way to pay the bills, with a tenth of Brits choosing these to help.
While one in ten (10%) of Brits have had to ask friends and family to loan them money or food when times are tight. Hardest hit is those with children or dependents, who rely on this method more as 15% say they’ve done this previously to help make ends meet when times got tough.
Sarah Brill, a financial coach for Claro Money, said: “It’s great to see that Brits have savings and have built up funds to turn to when times get tough.
“However, it’s such a shame to see hard work go to waste as savings are being called upon to meet the daily cost of living with inflation increases at a 30 year high. While previously spending habits might have seen Brits save to spend on rewarding big ticket items, new cars, holidays, a new top of the range kitchen extension and the likes, it’s now the mounting costs of living that is nibbling away at Brits’ hard-earned savings.
“Turning to savings when we have them is fine, but we would urge people to practice mindful spending. This means making a note of what you take out of your savings account and making a realistic plan to replace this when you can.
“Without doing this, it can be easy to deplete funds entirely and have nothing to fall back on, feeling deflated and unmotivated to get back into good money habits like having savings and making those future finance goals to benefit us later in life.”