With household finances under severe pressure due to the rising cost of living and rising unemployment, research by moneysupermarket.com has found 23% of Brits with savings are using this money to pay for everyday household bills and spending. More worryingly, almost 16 million Brits have no savings at all, leaving them without a financial buffer should their circumstances change.
Interestingly, a further 21% of Brits use their savings to pay for luxury items such as holidays, suggesting many consumers view their savings as a way to afford non essential items rather than as a ‘rainy day' fund.
A further breakdown of those with no savings reveals a vast disparity between older and younger generations. Four out of ten (39%) 18 - 34 year olds have no savings put aside compared to just two out of ten (20%) of those aged 55 and over.
Kevin Mountford, head of banking at moneysupermarket.com commented: "Many Brits are clearly feeling the pinch more than ever and are being forced to use their savings to pay for everyday household living. With the cost of living soaring it is difficult to balance the books, and many people will be tempted to dip into their savings, however, it is important to have some savings put aside in case your circumstances change suddenly.
“The common theory is that it's best to have at least three months' of outgoings put aside in case you were to lose your job or be unable to work for an extended period of time. However, in these tougher times, this may not be possible for everyone. There are some small steps though, that you can take to make some savings on the cost of living, which could then allow you to put away a small amount each week or month.
"Anyone who currently has no savings at all should take control of their finances and review their outgoings and try where possible to put away even just a few pounds a week - every penny counts. Over time this will build up and help to pay for unexpected bills. For example, checking through existing direct debits and making sure they are still valid and cancelling any unwanted payments may free up some cash.
"It is encouraging to see that more people are avoiding putting expensive luxuries, such as holidays, on credit. Although it can seem a hassle saving for a large purchase, in many cases it is better than funding through expensive forms of credit - perhaps we are starting to see Brits moving back to the save now, buy later habit previous generations adopted.”
