People forced to dip into savings to make it through to payday amid surging living costs are withdrawing £118 a month on average, a survey has found.
Around two thirds (68%) of people who set a budget end up dipping into their savings to make it through to the next payday, Tesco Bank said. One in 10 (10%) regularly need to dip into their savings.
Among people in their 20s and 30s, more than three quarters (77%) have to use savings to see themselves through to payday, withdrawing an average of £123 each month, the survey found. This adds up to £1,476 being taken back out of savings pots on average for this age group across the course of a year.
Life is getting more expensive and it is putting pressure on incomes and the budgets that keep our spending on track. This is leaving many with no option but to dip into savings to make it through to the next payday and the dent can be significant
While the majority of UK adults surveyed said they use a budget to keep their spending on track, nearly half (45%) said they go over their limit and nearly a third (31%) have increased their budget in the last six months, largely due to rising living costs.
Gail Goldie, director of savings and lending at Tesco Bank, said: “Life is getting more expensive and it is putting pressure on incomes and the budgets that keep our spending on track.
“This is leaving many with no option but to dip into savings to make it through to the next payday and the dent can be significant.
“This increase in the cost of living shows little sign of slowing down and this is why, especially at the moment, people should ensure their money is working the hardest it possibly can.”
More than 2,000 people were surveyed.
Here are Tesco Bank’s budgeting tips:
– Find out exactly what you have going out of your account and what you have coming in on a monthly basis. Get it all down on paper, on a spreadsheet or an online planner – whatever works for you. Put it down in writing, so nothing gets forgotten.
– Work out how much you are currently spending. Start with the essentials such as bills, food shops, petrol, childcare and then work through the other things you spend on regularly. It is not about cutting these out, but knowing you have the money set aside.
– Split spending into three categories – needs; debts/savings; and wants. Your needs column should cover essential bills. Debts and savings covers any outstanding debt payments or regular savings plans. Finally, your wants column should cover TV packages, eating out and gym memberships, for example. Add each of these three categories together and take the totals away from your income. This will show exactly where you should be financially each month and should help you put your budget together for the month ahead.
– After doing this, you can start to put pots of money aside for different parts of your budget.
– Do not worry about falling off track. Your budget will need to flex and move as the demands on your money do but if you have one in place then you will know what needs to change.
