Rising costs lead to changes in spending habits
Research from our Wealth and Wellbeing Research Programme* highlights how the finances of millions of people are being squeezed by the rise in the cost of living, and how they are changing their spending habits.
We’ve been surveying consumers quarterly since June 2020, and at no point - even during the pandemic - have we seen as many consumers expecting their finances to worsen. This highlights how the confidence of UK consumers is falling sharply as millions feel the effects of rising prices.
The research revealed:
Inflation shows no sign of abating and energy costs are set to rise again which may be the reason why consumers have missed payments on their utility bills (7%) or taken on high interest unsecured debt (3%).
People are taking a series of measures to cope including buying cheaper brands (31%), saving less (30%) and having less meals out or holidays (27%). One in five are also dipping into their savings and cancelling subscriptions.
Over a million workers have cancelled insurance policies leaving them even more vulnerable and over a million people are now paying less into their pension. The long term impact of which won’t be felt until these workers get close to retiring and find that they don’t have enough savings to fund the lifestyle they want.
Younger people aged 18-34 have been particularly impacted by the cost of living crisis, most likely because they haven’t built up sufficient savings to fall back on. This is also the first time in their adult lives that they’ll be experiencing a global financial shock. Conversely, many over 65s seem to be faring better as they are the only age group to have index-linked incomes.
It’s worth remembering that financial advisers aren’t just there to help grow money in the good times. They can give advice on where best to cut costs, and still ensure that their client achieves their long-term financial goals. If you haven’t got a financial adviser already you can find one by visiting www.unbiased.com
*The LV= Wealth and Wellbeing Research Programme is a quarterly survey of 4,000 UK adults to understand UK consumers and their attitudes to their personal finances and wellbeing. The statistics shown here are as a result of the survey we conducted in June 2022.