Brits slash spending as worries about winter of prices rises grow

Laura Suter
6 October 2021
  • 59% of people are already making cutbacks amid rising costs
  • Only a quarter of the poorest households think cutting back will keep their finances on track
  • Rising energy bills and food costs are the biggest concerns
  • 58% have already reduced their food shopping*

Laura Suter, head of personal finance at AJ Bell, comments:

 

“As a winter of price rises and soaring costs looms, people are already trying to cut back on their spending. With today bringing an end to the Universal Credit uplift as well as headlines filled with price rises and stock shortages, many households are already worried about what the next few months will bring.

“Three-fifths of people are worried about their finances already, with the same number having started making spending cutbacks. Most people have begun making cutbacks to luxuries (84%) such as eating out, trips and cosmetics. But almost three-quarters have cut back on their clothes spending, while worryingly 58% of people have already reduced their supermarket spend.

“Only a quarter of the poorest households think that cutting back will actually keep their finances on track, showing how much some families are likely to struggle this winter. The biggest concerns for families are the rising energy prices and the rising cost of food in the supermarket, as we near winter and Christmas looms.

“What’s more, many families are still feeling the effects of the pandemic on their finances, with a third of people saying they have less disposable income than before the pandemic. Women were much more likely to be worried about the current state of their finances and the impact rising costs will have, with 68% being concerned compared to 54% of men. 

“Lots of the big household costs people pay out for each month have been rising and have further to go. Whether it’s soaring energy bills, which leaped last week and will rise again in April when the next price cap change happens, or rising food costs, which already saw their largest increase in more than a decade this summer and are expected to rise further, it’s clear that household bills are going to rise.

“If you’re facing a fall in income or rising bills – or a toxic double whammy – then you need to get a grip on your finances and look at what you can afford. It’s not a particularly pleasant job but it’s essential to avoid getting into financial strife further down the line. You need to look at what you have coming in, after tax, and then list all the stuff you’re spending in an average month. Once it’s laid out it’ll be clear whether you can afford rising prices, or if you need to make cutbacks.

“The first port of call for anyone struggling should be to ensure they are claiming all the help and tax breaks available to them. The benefits system is head-achingly complicated to navigate but there is lots of support people might not be accessing, like help paying energy bills, council tax, childcare costs or even rent. Citizens Advice is a great place to get help working out the system.”

*Research carried out by FindOutNow on 1 October 2021 for AJ Bell, based on a nationally representative sample of 1,846 Brits.

Have rising costs left you worried about your finances?

Answer

%

Yes

61%

No

39%

Have you started to make spending cut-backs amid concerns about the rising cost of living?

Answer

%

Yes

59%

No

41%

Of those that said yes:

Where have you reduced spend?

Luxuries – cosmetics, treatments, eating out, excursions etc

84%

Clothes, shoes, accessories

73%

Supermarket

58%

Other

16%

Why have you started making cutbacks?

Worries about rising energy costs

72%

Concerns about rising food costs

66%

I have less disposable income since lockdown ended

33%

I had been spending a lot more after lockdown rules were lifted

17%

End of the furlough scheme

4%

Do you think by cutting back you will be able to keep your finances on track?

Yes

36%

No

16%

Not sure

48%

Laura Suter
Head of Personal Finance

Laura Suter is head of personal finance at AJ Bell. She is a multi-award winning former financial journalist, having specialised in investments. Laura joined AJ Bell from the Daily Telegraph, where she was investment editor. She has previously worked for adviser publications Money Marketing and Money Management, and has worked for an investment publication in New York. She has a degree in Journalism Studies from University of Sheffield.

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