The cost of living crisis continues to impact us all in one way or another. With energy bills and everyday necessities rising, it’s no surprise that the cost of living crisis is changing the way we’re spending and saving our money.
While the current economic climate is affecting our spending habits, it’s also impacting how we save…
What does it mean for our savings?
As we seek to understand our customers’ financial situation, our recent review of the cost of living shows it’s not only having a huge impact on our financial well-being but might be slowing our saving journey too.
We surveyed more than 2,000 people aged from 21 to 55+ , with incomes ranging from up to £18k to more than £100k, to find out how the rising cost of living is impacting our financial decisions and activity.
When it comes to savings, the majority are saving less than they were able to previously. And, of those who are saving money, our research found people under 50 are saving specifically for the cost of living crisis, which means they’re spending less on leisure and luxuries and using their savings for rainy days to help stay afloat.
So, how can we make good of a bad situation? We’ve highlighted some of the advantages and disadvantages of the savings market to help you maximise your savings.
The advantage of the savings market
Benefit from higher interest rates
The fluctuation in the economy is giving people the opportunity to shop around. As interest rates rise, we become savvier with our finances and notice what the rates mean for our savings accounts. As our review found, many people we are planning to start moving their money to get a better interest rate. Searching for better interest rates on your savings account will help you to get a better return on investment as higher interest rates push savings account rates up too.
Take a look at our rates here.
The disadvantages of the savings market
Harder to save
The cost of living makes it increasingly difficult to save. According to our latest research, 75% of people said they are saving less money than last year because of the cost of living.
At the same time, having to use savings to help them get by, with more than half from our review dipping into their savings to pay for everyday expenditures. And if they are saving, then it’s being put away for emergencies rather than luxuries – 54% said they were saving for emergency funds.
The falling pound
The drop in the value of the pound makes it hard to benefit from our savings. Our review found almost two-thirds of the people we surveyed are concerned about the falling value of the pound in comparison to other currencies. This has a knock-on effect on spending, as everyday necessities cost more due to a weaker pound.
How Hodge can support your saving goals
We can help you to maximise your savings with a competitive interest rate on your savings account. There are different types of personal savings accounts available, visit Personal savings to find out more about saving with Hodge.
This article is correct at time of publishing and for general information purposes only. We recommend you speak to a professional financial adviser for advice. You can find a financial adviser and further personal finance information at unbiased.co.uk .