Research by MoneySupermarket has revealed that nearly half of Brits (47 per cent) have stopped or reduced the amount they save in the last year. Of this, 12 million people have been forced to stop or reduce their savings just to fund day-to-day living and four million to pay off debt such as personal loans or credit cards (18 per cent). Meanwhile, a further one in five (19 per cent) of Brits did not save in the first place.
The current economic climate has taken its toll on households finances, as the research from MoneySupermarket found the main reason people stopped or reduced their savings was to fund day-to-day living (52 per cent), followed by money needed for household bills (42 per cent). Over a third had been affected by a reduced income, which meant they could no longer afford to save (37 per cent).
The research also asked people what they had stopped buying or cut down on in order to save money, over the last year. The majority of people said eating out (45 per cent), followed by buying new clothes (40 per cent) and going on holiday (32 per cent). More men said they had given up drinking alcohol (25 per cent) compared to women (18 per cent), while 29 per cent of women said they’d had to stop or cut down on having their hair styled compared to just eight per cent of men, in order to save.
Kevin Mountford, Head of Banking at MoneySupermarket, said: “It comes as no surprise that many people have reduced and even stopped saving completely at a time when cost of living is high against a backdrop of ongoing low interest rates. It is easy to accept rising costs as a fait accompli but there are many ways people can lower the impact. The first step should always be to review outgoings, ensure you are on the best deal for your needs and start looking at ways you can be more savvy with your spending – all steps which can help to free up some vital extra cash. Using MoneySupermarket to switch your major bills can help save over £1,000.
“For those people who say they have been put off saving due to low rates, the top savings rates are paying over six times that of base rate so it is still possible to gain decent returns. For the large number of people with no savings at all, it is important to try and start to save, no matter how small the amount. Even putting away just a few pounds a week can add up- as every penny counts. Over time this will build up and help to pay for unexpected bills.”
A sixth of Brits (16 per cent) have stopped saving altogether, with more females stopping saving (18 per cent) compared to men (14 per cent). The East Midlands (55 per cent) and the North West (54 per cent) were the top regions where most people had stopped or reduced their savings. Low interest rates stopped more men from saving than women, with men being a third more likely to be put off putting money aside (15 per cent) compared to 10 per cent for women.
Kevin Mountford continued: “While many are being forced to reduce their savings in order to pay for every day necessities, it is encouraging to see some consumers taking action and cutting back on lifestyle luxuries, to prioritise their savings. These changes don’t have to be huge- checking through existing direct debits to make sure they are still valid and canceling any unwanted payments may be another way to free up some cash. Money saved from canceling an unused gym membership of around £45 for example could find you piling the pounds in a savings account instead.”
