To help our customers understand how the cost of living crisis could be impacting them and how we can support you to make the best financial decisions, we regularly conduct in-depth research. In our most recent cost of living survey, we discovered emergency fund savings are on the rise.
We know the rising cost of living is impacting customers but we wanted to find out how, so we surveyed 2,000 people, ranging from 21 to 55+ years old, with varying income levels from £18k to more than £100k. Participants shared insights into their spending habits, concerns about the rising cost of living and how they’re using their savings.
One of the most significant findings from our research is that emergency savings are on the rise. In fact, 54% of our participants reported creating an emergency cost of living savings fund, compared to 58% a year ago. Indicating that many people are taking proactive steps to safeguard their financial well-being in uncertain times.
As the cost of living increases, essential expenses like groceries, energy, and fuel are given more focus. In 2021 and 2022, inflation in the UK reached a peak of 11.1%, post-pandemic. Our research revealed more than half of respondents are saving with the cost of living in mind, and 83% express worry about these rising costs.
At the same time, we found a change in spending and saving habits. Dining out, luxury goods and grocery shopping have seen the most significant reductions in spending. Additionally, many cost-conscious consumers scaled back their spending during the Christmas period, with one-third worrying about going into debt during this time.
A notable 75% of participants believe they will save less this year than the previous year, and more than half have had to dip into their savings for everyday expenses.
Age, gender, and income are factors that influence how people are saving and their financial concerns. We found people under 50 years old were significantly more concerned than those over 50. Women were 11% more likely to express worry about their finances than men. Even those earning higher salaries ranging from £60k to £80k per year were concerned about falling into debt. Overall, 61% of our participants expressed concern about the performance of the UK's economy.
The cost of living crisis affects different regions in distinct ways. For instance, nearly one-third of those living in London are worried about house prices, leading to 22.5% of Londoners saving more for house deposits. In contrast, residents of North West England are more concerned about energy prices, with a substantial 80% of people in this area considering reducing their energy usage for financial reasons.
To learn more about our research into the cost of living crisis and how Hodge can continue to support you, visit our cost of living hub where you can find more valuable insights and solutions to support you.
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.