Two thirds (66%) of people have reduced their outgoings to cover essential bills, according to the poll from Nationwide Building Society, while four in ten (41%) people have less than £6.60 per day (under £200 a month) to spend on themselves after paying the bills – just enough for a supermarket meal deal, coffee and chocolate bar. This represents around half of the average daily discretionary spend across the UK of £13.22 (£402 per month), according to the research.
The poll of 2,000 respondents forms part of Nationwide's Spending Report – a quarterly snapshot of more than 700 million customer transactions. For the second quarter of 2018 (April - June) it highlights for the first time that discretionary spending has dipped broadly in line with rising essential costs, from household bills to fuel. It has previously remained relatively unchanged as consumers maintained spending levels, despite the rising cost of living.
The Spending Report (see link) shows that discretionary spending in most areas has dropped, including holidays, recreation, lottery and charity donations, with the only area to see an increase being eating out. In total, customers recorded an average of £1,109.55 in discretionary spending in the period – some £60.76 less than the same period last year. Conversely, customers spent an average of £1,510.35 per month on essential bills - £87.80 more than the same period last year.
According to the research, more than two thirds (67%) say it’s harder to survive each month financially now than five years ago, with eight in ten (82%) saying they have seen bills increase – with utilities, council tax and cost of food highlighted as the main costs to have risen over the past 12 months.
Around a quarter (26%) are regularly outspending their earnings, with those people overshooting their bank balances by £101.84 every month on average (£1,222 a year). Just under three in ten (29%) see credit cards and overdrafts as an extension of their bank balance. However, around half (52%) do not overspend at all each month.
While many Brits are cutting costs, the areas least likely to be reduced include Wi-Fi usage (just 5% would cut back), club memberships (10%), smoking (12%), gym membership (14%) and buying healthy food (15%).
The pressure on finances is also forcing some people to miss important payments. Close to a third (30%) of Brits have missed payments in the past year, with utility bills (16%), rent (12%) and insurance (6%) the top three. Conversely, many of those surveyed said that payments into a pension (14%), paying into life cover, or critical illness (8%), and home insurance (16%) are things they wouldn’t be willing to cut back on when trying to save money.
Regionally, there is a big difference in the amount of disposable income left each month on average, with a gap of £317 between the highest and lowest areas (London and Wales):
|
Regional breakdown of amount of money remaining each month after living costs (average) |
|
|---|---|
|
London |
£585 |
|
North East |
£536 |
|
East Midlands |
£404 |
|
West Midlands |
£386 |
|
Scotland |
£372 |
|
East of England |
£371 |
|
South East |
£370 |
|
North West |
£362 |
|
Yorkshire and Humber |
£353 |
|
South West |
£307 |
|
Wales |
£268 |
Guy Simmonds, Nationwide's Head of Customer Management, Current Accounts, said: "Our Spending Report indicates that the rise in essential costs is beginning to have an impact on our day-to-day spending habits. Whether future reports see this pattern continue remains to be seen, although it does mark an interesting point as finances are clearly under some pressure.
"Despite the reality that money is tight for some, there are encouraging signs that people are taking the right steps by cutting back on non-essential spending and finding ways to make their money go further.
"When things become difficult we'd always advise sticking to a budget, shopping around for the best deals on your household bills, switching supplier to get the best value if necessary and, if you use a credit card, find one that offers zero per cent interest on balance transfers and purchases. But make sure at least the minimum is paid off each month to avoid additional interest and ensure you are able to pay off the costs in full by the end of the term."
About Nationwide
Nationwide is the world's largest building society as well as one of the largest savings providers and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million customers.
Customers can manage their finances in a branch, via the mobile app, on the telephone, internet and post. The Society has around 18,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.
