With the cost-of-living crisis deepening, worried Brits have been forced act.
Brits are slashing spending on takeaways, clothes and holidays and abandoning plans to save – with 93% of people fearing the cost-of-living crisis will only get worse.
Weekly spending budgets will be tightened by a third (34%) on average in 2023, it’s claimed.
Not only that, but the majority of UK adults (59%) now think they won’t have enough money to make it through the year comfortably.
Cost-of-living crisis: Brits react
Takeaways are the most common luxury people are looking to cut back on, targeted by 63%, followed by clothing, shoes and accessories (59%) and holidays (40%).
Meanwhile, just under half (46%) of the 2,000 Brits quizzed between December 22 to 29 on behalf of the UK’s largest digital bank, Monzo, said they have already cut costs by shopping at a cheaper supermarket.
As for saving money, 69% admitted the very idea feels “overwhelming” right now.
Almost one in five (18%) expect to put aside nothing this year, having abandoned their savings goals in the face of rising energy bills, higher interest rates and needing to pay more for essential goods.
And over a quarter (26%) of respondents said they’ve had to give up on their dreams of buying a house as a direct result of the cost-of-living crisis.
Time for a savings challenge?
The study also found 61% of those quizzed admitted they had never heard of a savings challenge.
These are simple budgeting activities that help people achieve specific financial goals, often in a more manageable and realistic way.
But encouragingly, those who had tried such a challenge have on average saved an impressive £1,700.
To help people feel more empowered to save smaller in 2023, Monzo has partnered with Alice Tapper, who has shared her top financial tips for 2023.
Sometimes, the first and most important step to feeling more in control of your money is to simply take a look at where it’s going.
She said some people find open banking apps helpful, as they let you see all of your accounts and subscriptions in one place.
Next she suggests breaking it down.
Mental accounting is a principle in behavioural economics. This means our brains find it much easier to manage our money when we break it down into categories.
With Monzo you can use ‘pots’ to do this (they’re a bit like digital piggy banks).
Some people find it helpful to open up pots for different life categories and saving goals, for example, a home renovation or their next holiday.
So today we’re launching Small Change – a series of posts with ideas about how to help you stay on top of your money and make it go a little further.
We’ll share practical steps you can take with Monzo in minutes, as well as stories from folks who’ve found them handy. pic.twitter.com/2sfNPKG6CN
— Monzo (@monzo) January 9, 2023
Automate your finances
The secret to sticking to your financial goals is automation.
Life is busy enough and remembering to pay bills, save money, pay off debt only makes it busier.
Use things like standing orders and direct debits where possible and have a go at using a saving app that helps you save without thinking.
She also recommends Bris hold on to the joy.
We’ve all got a thing that we would really struggle to cut out of our lives and yet annoyingly, it’s often the first thing financial experts tell us to cut back on!
Whether it’s the twice-monthly takeaway or our coffee from that little place on the corner.
As opposed to forcing yourself to avoid the things that bring you genuine joy, take 30 minutes to look through your spending, and identify the joyless, non-essential items that either you can cancel/cut completely or find a cheaper alternative.
Finally, take up a challenge.
If you want to spice up your saving even more, why not start a savings challenge.
There’s an app called IFTTT (If This, Then That) and it lets you link your Monzo account to other apps and set up rules to move your money around automatically.
The 1p Saving Challenge involves saving a little money every day, starting with 1p. The next day you save 2p, the day after 3p.
After a year, you’ll be setting aside £3.65 on the final day and have a total of £667.95 in savings!
Cost-of-living crisis: ‘Prospect of saving is daunting’
Sujata Bhatia, Monzo’s Chief Operating Officer, said: “Understandably, the prospect of saving is daunting for many at the moment, but it doesn’t have to be.
“At Monzo, we know that saving small amounts over a long period of time can still have a hugely positive impact on your finances.
“Monzo customers saved over £175 million last year using our saving tools and features, such as Round-ups, meaning whenever more than £1 is spent, the difference is rounded up and added to a Savings Pot automatically, and IFTTT challenges.”
Monzo has shared a series of ideas to help customers stay on top of their money and make it go a little further, as part of its Small Change campaign. To find out more, visit: https://monzo.com/blog/.
Read more: Brits ditch their New Year’s Resolutions ahead of Quitters Day
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