Nearly half of people forced to raid savings to cover everyday costs | Personal Finance | Finance
A survey has indicated that nearly half of individuals are resorting to their savings, on average three times a month, to cover daily expenses. This is despite 61 percent of people feeling more optimistic about their finances compared to this time last year, with one in three (39 percent) feeling more pessimistic, as per Compare the Market’s latest Household Financial Confidence Tracker.
Three quarters (76 percent) feel confident about being able to manage and pay their household bills in the coming months. However, when asked how often people are needing to dip into their monthly savings to afford everyday living costs, 45 percent admit they do so at least once a month and 21 percent need to at least once a week.
On average, people are having to dip into their savings around three times per month, while 27 percent say they are unable to save anything at all and 25 percent can save only between £100 and £250 each month. Some 20 percent only managed to make the minimum repayment on their most recent credit card bill and less than half (48 percent) are regularly paying off their credit card balance in full each month.
To counteract the impact of rising everyday costs, 42 percent have cut back on buying clothes and 36 percent on holidays. Almost half (48 percent) have had to cut back on eating out.
Regarding summer travel plans, 41 percent can afford a holiday in the UK, while only one third (34 percent) are able to head to a European destination and just eight percent can afford to do both.
The poll suggests that more than a quarter of individuals (27 percent) are resorting to debt, including credit cards and buy-now-pay-later schemes, to cover holiday expenses this year.
Andy Hancock, chief growth officer at Compare the Market, expressed: “It is encouraging that people are seemingly confident about their ability to manage and pay their everyday bills in the summer months ahead, signalling a positive outlook on the consistency and reliability of their financial situations.”
He further added, “However, our research shows that many people are still struggling to save on a monthly basis, and a significant number are having to rely on those savings each month to pay for everyday bills or lean on credit cards for additional costs such as holidays.”
He pointed out that “Credit cards can be a valuable tool for making purchases, such a paying for holidays. However, when taking out a credit card you have to be mindful of not borrowing more than you can afford. It’s worthwhile paying off your credit card balance in full every month to avoid paying interest.”
Censuswide conducted a survey of 2,010 UK adults between May 10-13.
