Worried Brits reducing weekly budget by a third as cost of living crisis deepens

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Brits are slashing spending on takeaways, clothes, and holidays and abandoning plans to save - with 93 per cent of people fearing the cost of living crisis will only get worse.

Weekly spending budgets will be tightened by a third (34 per cent) on average in 2023, as stark new research reveals the majority of UK adults (59 per cent) now think they won't have enough money to make it through the year comfortably.

Takeaways are the most common luxury people are looking to cut back on, targeted by 63 per cent, followed by clothing, shoes, and accessories (59 per cent) as well as holidays (40 per cent).

Meanwhile, just under half (46 per cent) of the 2,000 Brits quizzed between December 22 to 29 on behalf of the UK's largest digital bank, Monzo, reported that they have already cut costs by shopping at a cheaper supermarket.

As for saving money, 69 per cent admitted the very idea feels "overwhelming" right now and almost one in five (18 per cent) expect to put aside nothing this year, having abandoned their savings goals in the face of rising energy bills, higher interest rates, and needing to pay more for essential goods.

And over a quarter (26 per cent) of respondents noted they've had to give up on their dreams of buying a house as a direct result of the cost of living crisis.

The study also found 61 percent of those quizzed admitted they had never heard of a savings challenge - simple budgeting activities that help people achieve specific financial goals, often in a more manageable and realistic way. But encouragingly, those who had tried such a challenge have on average saved an impressive £1,700.

To help people feel more empowered to save smaller in 2023, financial educator Alice Tapper has shared some top tips.

1. Take a look - Sometimes, the first and most important step to feeling more in control of your money is to simply take a look at where it's going. Some people find open banking apps helpful, as they let you see all of your accounts and subscriptions in one place.

2. Break it down - Mental accounting is a principle in behavioural economics, which means our brains find it much easier to manage our money when we break it down into categories. With Monzo, you can use 'pots' to do this (they're a bit like digital piggy banks). Some people find it helpful to open up pots for different life categories and saving goals, for example, a home renovation or their next holiday.

3. Automate your finances - The secret to sticking to your financial goals is automation. Life is busy enough and remembering to pay bills, save money, and pay off debt only makes it busier. Use standing orders and direct debits where possible and have a go at using a saving app that helps you save without thinking.

4. Hold on to the joy - We've all got a thing that we would really struggle to cut out of our lives and yet annoyingly, it's often the first thing financial experts tell us to cut back on! Whether it's the twice-monthly takeaway or our coffee from that little place on the corner. As opposed to forcing yourself to avoid the things that bring you genuine joy, take 30 minutes to look through your spending, and identify the joyless, non-essential items that either you can cancel/cut completely or find a cheaper alternative.

5. Take up a challenge - If you want to spice up your saving even more, why not start a savings challenge? There's an app called IFTTT (It stands for 'If This, Then That') and it lets you link your bank account to other apps and set up rules to move your money around automatically. The 1p Saving Challenge involves saving a little money every day, starting with 1p. The next day you save 2p, the day after 3p. After a year, you'll be setting aside £3.65 on the final day and have a total of £667.95 in savings! To find out more, visit: https://monzo.com/blog/