Home cost of living
Living on the edge – more households make cutbacks
27 November 2018
Spendthrift or thrifty
Even as Britons are lured into the festive spending frenzy, research from AA Financial Services reveals that the number of households making their salaries stretch further by a range of cost-cutting initiatives has soared in 2018.1
The AA data shows that the proportion of people trying to reduce their monthly commitments rose from 49% in the spring and 54% in July to 79% in November. This is while the nation adjusts to the interest rate increase in August, rising living costs and stagnating wages.
Faced with the choice of being a seasonal spendthrift or plain thrifty, AA Financial Services warns that many households could sleepwalk into a financial crisis in 2019 if they get carried away by the hype of pre-Christmas sales.
Economy drives
The top priority for pulling the purse strings is to shop around for a cheaper utilities supplier (40%), while 28% of respondents wanted to save money on their home insurance, and 25% planned to switch to cheaper supermarkets. Some of the figures have doubled in just 3 months, as shown in the list of top 10 economy drives below.
This domestic economy drive is more prevalent among parents of young children, where the cost of raising a family is causing the greatest financial strain. Overall, 89% of parents with children under the age of 4 were looking to make financial cutbacks. This compares with 84% of parents with adult children, and 79% of adults with no children.
David Searle, AA Director of Personal Finance, comments: "The quarter on quarter increase in the proportion of households looking to save money on their fixed monthly commitments is a clear indication of the squeeze many are feeling, as salaries fail to keep up with the cost of living.
"Many people start a new year with resolutions to get their finances in shape, and it's important in this period of Christmas sales that consumers don't start 2019 in a position of difficulty.
"Further, looking at the cutbacks people are looking to make, few are extending their savvy shopping to the financial products they currently hold. Reviewing mortgage, credit card and loan arrangements are direct and meaningful ways to reduce your monthly commitments.
"For anyone looking to save money this Christmas – or to make their money go further – we encourage them to challenge AA Financial Services to see how we can help."
1 Consumer poll conducted by YouGov for The AA among a UK representative sample of 2,036 adults.