The spending we refuse to ditch
Across the UK families are affected by the rising cost of living, particularly increasing energy and food costs.
Despite the drive to curb spending, many households are increasingly struggling to cope as the financial malaise continues.
Worryingly, a third (33%) of UK families say they cannot afford to cut their expenditure further, and this rises to nearly two-thirds (65%) of single-parent families. And of those who say they could make further savings, the average is just an extra £53 a month – less than a typical tank of fuel.
There is not much room for manoeuvre and the challenge we face is to make less money go further. There's plenty of evidence available to suggest this is already happening. Socialising at home is becoming more widespread, which is reflected in the weekly closure of restaurants and pubs around the country. And supermarkets are waking to the opportunities this creates, offering various 'meal deals' and discounted drinks.
Ditching the luxuries
So what happens when a family finds itself at full stretch financially? How do they prioritise what goes first?
The most recent Family Finances Report from Aviva found that if their finances became stretched, families say the first thing to go would be discretionary spending on life's 'little luxuries'.
Over a quarter of UK families (26%) said they would give up their weekly takeaways, and 23% said they would turn their heating on less frequently. Other ways that people suggested saving money was by giving up drinking alcohol during the week (22%) or by sacrificing their satellite TV package (20%).
The things we won't give up
Interestingly though, 'little and often' luxuries such as a morning coffee were much less likely to be something that people would give up (6%). This suggests people don't think that small cutbacks would make much of a difference. However, a £1.99 coffee every working day works out at £478 a year – which would be a considerable saving from such a small change.
We also posed the question of what things families would not give up 'at any cost'.
Interestingly, a high proportion are resolute about ensuring they protect their futures - 14% stated they would not stop paying into a pension, and a further 14% cited life insurance as being an indisputable expense.
It seems that austerity measures can only go so far though and nearly one in five families (17%) say they would refuse to give up their summer holiday this year, even if their financial situation were to become squeezed.
Many households are weathering the economic storm by rejigging their priorities, and making a plan to save – even a small amount – on a regular basis can give some peace of mind. Luxuries and treats have their place, but building up a savings pot creates a financial safety net which is likely to be worth more if unexpected costs arise.
Richard Kelsall is head of savings at Aviva.
What do you think? What have you given up to improve your financial health? Is there anything that you would not consider ditching, no matter what? Let us know in the comment box below.
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