How Has the Cost-of-living crisis impacted savings

Over the course of the past 18 months, we have seen prices for everything from food to energy soar. While the rate of inflation has started to come down, it’s still above the 2% target set out by the Bank of England. This trend is likely to last for a while.  With living costs remaining high, is it possible to save? 

Is the UK able to save?

Managing our finances has evolved in recent months. Many UK households’ budgeting has adapted to accommodate higher prices for fuel, energy bills, food, and other expenses, such as childcare provision.

However, while there are higher costs to consider, a recent study by Leeds Building Society has revealed that six in 10 (59%) people are still able to put some money into savings accounts each month.

The study, which surveyed 2,000 people in a bid to establish their savings attitudes in 2023, also revealed that almost three-quarters (61%) had set themselves savings goals for the year.

Who is saving during the cost-of-living crisis?

While the rising cost of living continues to impact people in 2023, some have opted to focus on savings in order to prepare themselves financially. Survey respondents aged between 18 and 34 were the most likely to plan to start saving money and one in five 18–24-year-olds (20%) said they want to start saving this year. Almost a quarter (24%) of 25–34-year-olds also planned to save.

Residents of Northern Ireland were saving more in 2023 despite the cost-of-living crisis, with 9% saying they were budgeting more of their income for their savings account.

What are people saving up for?

Of the 59% of people still able to put their earnings into savings accounts, a quarter (23%) said they are specifically looking to save more money for a rainy day. One in seven (14%) said they are trying to save money for a specific purchase this year.

Having these financial goals makes a fifth of UK adults (19%) feel empowered, while a further fifth (19%) feel reassured by having backup funds in place.

How to save right now

It’s still possible to save right now. If you’re wondering how to create opportunities to place some of your income into a savings account, here are some tips:

1. Look at your current contracts

Are you due to update your phone or Wi-Fi contract? Maybe it’s time to check your monthly bills to explore opportunities to get a better deal. If you’re with one internet provider, for example, you could get a better deal elsewhere. Speak to your current provider first, however, as they might be able to give you a counteroffer.

2. Shop around for groceries

It can be easy to keep shopping in the same supermarket. However, you might find cheaper groceries if you try somewhere else. Compare your regular shop with other places to see if you can make savings. Also, avoid express supermarkets as these are usually more expensive.

3. Buy and sell second-hand

Try clearing out your cupboards and see if there are any items you could sell. Likewise, rather than buying brand-new items, see if you can get cheaper alternatives at flea markets and other outlets.

4. Join loyalty programs and reward schemes

You could end up bagging some bargains and saving cash in the long run if you sign up for loyalty schemes. Boots Advantage Card is one example, but there are many available.

5. Compare your insurance

See if you can get better home or car insurance with another provider. Check when your premium is up for renewal and compare what’s available.

Matt Bartle, Director of Savings from Leeds Building Society, said: “Since the Bank of England began raising interest rates in December 2021, the nation’s appetite to find out more about ways to save, and Cash ISAs specifically, appears to have been growing, particularly in recent months.” As the cost-of-living crisis continues, it’s worth taking the time to look at ways to save.