Brits forced to use savings to cope with the rising cost of living

With the rising cost of living taking its toll on UK household finances, a poll by MoneySuperMarket shows that two third of Brits (62 per cent) have had a dip into their savings this year at some point, with a third (28 per cent) doing so to fund general living expenses.
 
The recent MoneySuperMarket poll of over 1,500 site users reveals 28 per cent of people have had to raid their savings this year to fund general expenses, while a further 21 per cent have needed to dip into the pot to help fund a major purchase. Twelve per cent admitted to turning to their savings this year but stated they always delved in and out of the pot anyway. A further five per cent said they wanted to but didn’t end up doing so. Just under a tenth of people (9 per cent) don’t have any savings to rely on at all.
 
Kevin Mountford, head of banking at MoneySuperMarket commented: “With the cost of Christmas, rising energy costs and increases in other expenses such as the cost of commuting, it is very easy to dip into any savings you may have, especially when rising costs are leaving you short of cash every month. The danger of this though, it that you soon run out of savings as a result and are left looking for alternative ways of funding this shortfall.
 
“It is vitally important to have some savings set aside for a rainy day or in case of an emergency which can help keep your head above water should the worst happen.  In an ideal world, you should have savings equivalent to at least three months’ salary, but for many this may seem an ambitious and unachievable goal. However, in the current climate, every penny counts and putting something away, no matter how small, on pay day can soon add up. Getting into the habit of putting money aside in a savings account on the day you get paid and budgeting to make the most of your remaining salary is vitally important. If you find that your ability to save if hampered by rising bills, make sure you are making the most of your money by trying to lower those outgoings by switching to a better deal.
 
“Although rates may be low, there are some decent returns to be had. People can earn extra interest just by being proactive and switching to better paying easy access accounts or even switching to a current account which pays a good rate of interest on credit balances. Easy access accounts, for example, are paying as much as 1.60 per cent AER and the leading current account interest rate at present is 5.00 per cent AER, which savvy savers shouldn’t ignore. Now is the time for savers to start thinking about switching and make sure they savings work as hard as they can.”