Aldermore bank’s latest Savings Tracker1, a survey of 4,000 UK adults, reveals that the rising cost of living is currently the UK’s biggest money concern, by a considerable distance over other financial worries. Against a backdrop of soaring inflation, predicted to reach its peak at 8.3% this Spring2, increased mortgage bills and the energy price cap hike, consumers have been hit hard. And yet, over a third of UK adults (37%) haven’t made any plans to mitigate the rise in living costs.
Overall, the outlook amongst savers hasn’t improved from 2021. Two in five UK adults (41%) are worried about their financial future – the same level as twelve months ago. Moreover, a quarter (27%) say that their current financial situation is not sustainable. Two in five (22%) weren’t able to save last year, with one in three (33%) saying this was due to having no money left after outgoings and bills. Given the current environment, this is likely to get worse, indicating many could struggle with the rising cost of living.
The next biggest money worries were Covid-19 related as one in five (21%) were concerned about their health and 20% mindful of not having adequate emergency funds in case of unexpected expenses. The impact of Brexit on the economy remains on many people’s minds, cited by one in five (20%) as a worry. Although, fears of the Brexit impact have diminished slightly among the UK public as year-on-year it fell from 26% in 2021 to 20% this year.
| Top ten money worries 2022 | Percentage citing it as a concern |
| Rising costs of living | 47% |
| My health | 21% |
| Not have enough money for unexpected expenses | 20% |
| The impact of Brexit on the economy | 20% |
| Not being able to afford a good quality of life | 17% |
| Not having enough money for retirement | 15% |
| A slow economic recovery | 15% |
| Not being able to pay bills | 14% |
| Not being able to go on holiday | 11% |
| Potential of losing my job/wage decreases | 8% |
Many are taking action to combat rising costs, with many focusing on cutting spending on non-essential or luxury items as the most popular method. Of those who have taken steps to prepare themselves for the increased costs of living, the most common actions are to shop less frequently for non-essentials i.e. clothes and toys (33%), reduce spending on socialising (28%), and shopping in different, lower-cost supermarkets (22%).
| Rising inflation actions | |
| Shopping less frequently for non-essentials (e.g. clothes, toys) | 33% |
| Reducing spend on socialising (e.g. dining at restaurants, bars) | 28% |
| Shop in other supermarkets to save money | 22% |
| Cutting back on holidays abroad | 18% |
| Switch energy providers to ensure I am on the best deal | 15% |
| Cycle/walk to and from places more rather than using a form of transport | 11% |
| Cancel streaming subscriptions (e.g. Netflix) | 10% |
| Working from home more instead of commuting | 9% |
| Use my car less and use public transport more instead | 8% |
| More savings into equities and investments | 6% |
| Use some savings to pay off some of my mortgage | 4% |
| Switch mortgage providers and lock in a cheaper deal | 4% |
| N/A - I have not made any plans to mitigate a potential rise in the cost of living | 37% |
Nearly a quarter of UK adults (23%) say they do not have any funds saved in case of an emergency. And of those who do have an emergency fund, one in three (31%) say it would last them less than a month without an income. This increases to just over half (52%) who say it would last less than three months without any income.
Of those who didn’t save anything last year, one in five (20%) said that poor interest rates meant there was little point. However, the good news is that the recent base rate rises may inspire people to build up that emergency fund; nearly a third of UK adults (30%) said rate rises will encourage them to save more in 2022, rising to 45% among 18 to 34 year olds.
However, nearly half (47%) believed it wouldn’t change their savings levels. A generational difference of opinion appeared to emerge, with this figure highest among over 55s at 59% compared to only a quarter (25%) of 18 to 34 year olds, suggesting younger generations will be more motivated to save in a higher rate environment.
Ewan Edwards, head of savings at Aldermore said: “With inflation at a 30 year high, and energy bills predicted to increase by over 50%, more households across the country will be feeling the effects on their disposable income. As the cost of living rises, we’d encourage people to be proactive in planning for it, so they do not feel underprepared. Taking positive action to review personal finances, budget, and save can make all the difference in maintaining long term financial stability.
“It’s concerning that our research shows over half of UK adults do not have enough to last three months without an income, with a quarter having no rainy day fund at all. I’d advise everyone to start growing an emergency fund as it is hugely beneficial in acting as a buffer against unexpected costs and easing the stresses that can come with it. As living costs rise in 2022 and possibly beyond, it’s more vital than ever to nurture good financial health.”
**Ends**
1Research conducted, on behalf of Aldermore bank, by Opinium between 9 -14 December 2021, with a sample size of 4,000 UK adults ages +18.
2 Resolution Foundation’s Living Standards Outlook for 2022 (released 8 March 2022)
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