More than half of Brits are spending their savings on today’s increasing costs, so what happens tomorrow?

Savings are often part of everyday budgets

While households may have adapted to higher living costs, our findings suggest many are turning to their savings to help make ends meet.

More than half of people (57%) say they’re dipping into their savings regularly to cover everyday costs. It’s a sharp jump from 35% who used savings for daily expenses in 2024 and just above the 55% recorded to do the same in 2022 when the cost of living crisis was at its peak.

Our safety nets are getting thinner

As savings are increasingly called upon to cover regular household spending, it’s perhaps no surprise emergency funds are taking a back seat.

Our research found just 37% of people are putting money into an emergency fund. To give some context, this is the lowest figure recorded since we began our research in 2022, when 58% said they were putting money aside for unexpected costs. We’ve seen a steady drop over the course of 2023, 2024 and 2025.

In another Hodge study on expected costs during 2025, a third of Brits said they’d faced unanticipated bills they couldn’t afford to pay, while 34.5% had fallen behind on bill payments due to unforeseen costs.

So, as safety nets to cover the unplanned expenses like car repairs, home damages and vet bills get thinner, is there anywhere to cut back?

Spending cuts have already been made

When costs first started climbing, households looked to their non-essential or nice-to-have costs to see where they could pinch some pennies. In 2022 this seemed very doable, with 63% of people telling us they were cutting back on dining out, 83% were cancelling subscriptions and 55% reducing holiday spend.

Jump to the present day and it would seem we’ve already stripped back in these areas which has left little to keep cutting away. Only 45% of people are cutting back on dining out, 32% on subscriptions and 42% on holiday funds.

The biggest concerns feel closer to home

Despite much of the media and news reports being about the economic uncertainty caused by conflict and trade wars, people seem less concerned about some of the pressures that dominated the headlines four years ago.

• Concern about inflation has fallen from 67% in 2022 to 44% today
• Interest rate concerns have fallen from 32% to 20%
• And concern about energy prices has fallen from 91% to 63%.

Why might this be? Perhaps we’ve simply got better at living with higher costs. But adapting doesn’t mean the pressure has disappeared.

So, where is our money going?

Food and everyday costs are now the biggest barrier to saving, with 66% saying these expenses are making it harder to put money aside. That could help explain why savings are increasingly being used as a buffer against everyday spending.

And despite people adapting to higher costs, confidence remains fragile. Just 62% currently feel confident, the lowest level recorded in Hodge’s research since 2022.

We’re still saving, but tomorrow may suffer

The story isn’t simply that people are spending their savings. It’s that the role of savings appears to be changing. The money that might once have been put aside for emergencies, holidays or the future is increasingly being used to help manage today.

And that leaves a challenge for savers: not saving more, but how to balance the demands of today’s livings costs with the plans for the future.