Nearly half (46%) of UK adults have admitted feelings of anxiety with their financial situation, according to a study* from smart money app Plum.
The research, which polled 2,000 adults, found people taking extreme measures to cope with rising bills.
An alarming 14% (1 in 7) are having to skip meals and more than 1 in 10 have cut their pension contributions (12%). Half of respondents (50%) have reduced their heating but worryingly, people aged 55 or more are turning down their heating most (55%). As temperatures start to fall, this could mean older people live in cold environments beyond what is advisable, damaging their health.
Other common measures to overcome growing household costs include reducing holidays (31%), switching shopping brands (27%) and cutting back on driving (24%). Just 1 in 5 people (21%) said they don’t need to make any changes to pay their bills.
Energy bill struggles
While the announcement about the new Energy Price Guarantee was welcome relief for millions of households following Ofgem eye-watering increase to the energy price cap, prices will still be almost double what they were capped at between October 2021 and March 2022.
That means many will still struggle to pay their energy bills, with our research finding almost two thirds of UK adults (62%) would be uncomfortable paying £2,500 a year based on typical energy consumption. In addition, there is broad pessimism about energy prices falling, as close to half (43%) do not believe that energy bills will ever return to March 2022 prices.
Commenting on the findings, Victor Trokoudes, CEO and co-founder of Plum said: “These are stark findings, showing the scale of the challenge ahead of households up and down the country to cope with rising costs. Naturally, the sheer pace of price increases is causing anxiety among UK adults. And things are about to get harder as our energy bills will be 96% higher on average from October than they were just a few months ago, despite the Government’s new Energy Price Guarantee.
“In order to cope with rising bills, we’re seeing people take a mix of short-term measures like cutting holidays, substituting brands that they normally buy or switching to a discount retailer. However, there is a significant proportion of people who are compromising their longer-term financial position, with 1 in 10 cutting the amount they contribute to their pension and cutting the amount they invest.
“Alarmingly, some people are also having to take extreme measures like skipping meals. Talking to someone about your money challenges and seeking help is an important step. Positively, 44% of people are happy to talk about their financial situation with others. All financial service providers also need to work with the Government to inform people in clear and simple ways about all the support that is available to them. And free money apps like Plum can have a major role in helping people budget and manage their spending”.
Spending on clothing rises in August
People spent far more in August on clothing and accessories compared to July (+9%), according to Plum’s Money Unwrapped analysis which looks at changes in spending based on customer transactions.
This is likely due to back to school costs, with adults aged between 25-34 years seeing the biggest increase in spending compared to other age groups (+11%). Spending on eating out and dining also rose significantly, increasing by 11% as the summer holidays drew to a close.
Interestingly, household bill payments outside of utilities fell (-9%), which suggests more people are cancelling or switching TV, mobile and broadband subscriptions to make ends meet.
Victor added: “The findings from our Money Unwrapped analysis suggest rising spending across almost all categories. As we predicted last month, it appears August saw consumers taking advantage of end-of-season clothing sales, particularly on school uniforms, and restaurant promotions on kids’ meals this summer, before higher prices return.
“It’s essential to cancel the outgoings that are no longer must-haves, and downgrade the ones you don’t use to their full potential — that could mean moving to a basic tier of gym membership, or switching to a SIM-only deal on a phone contract that’s run its term”.