New Year, Less Money in Our Pockets

While it’s inevitable that the problems of 2022 are not going anywhere anytime soon in 2023, it’s worth looking into how people have been affected in their finances and what the year might hold. To start off on bleak news, personal savings are down by 21% compared to 2021 and now UK households have about £250 less disposable income per month because of the cost of living crisis.

It’s no wonder that plenty of people have been struggling to add anything to their savings last year. With the cost of living crisis rearing its ugly head and the energy crisis following suit, households have been finding it more and more difficult not to simply live paycheck to paycheck. Prices have been mounting all over the place, which has made savings more of a luxury.

Last year, commuters were hit with increased travel costs of around £100 every month, compared to 2021. The average costs have risen from £116 to £221 at the end of 2022. And thanks, in part, to Trussonomics, people are paying a lot more for their mortgages, and rents have also been affected. An average of a £60 increase in rent or mortgage payments have hit household incomes.

The energy crisis, which won’t be resolved this year, has seen the price of domestic fuel rocket. Despite the government’s Energy Price Guarantee being implemented, electricity and gas bills have risen about £100 a month to around £248. All of these factors, and more, are adding up, causing people to pinch the pennies wherever they can to save crucial pounds.

According to a recent survey from The Mirror, almost a quarter of households don’t believe their financial situation will change in 2023, but people have been doing all they can to secure their finances, from reducing their spending on non-essentials, like days/nights out, to working overtime or keeping to a strict budget. Over a quarter of people of the 2,000 surveyed by The Mirror started implementing a budget for the first time in 2022.

Now that the new year is upon us, the biggest financial goal is to generate savings to protect from further price hikes that we might see in 2023. Some even want savings to protect from any job issues arising from the potential recession. Other savings goals were to amass enough for a deposit on a house and to max out their Lifetime ISA bonus this year.

According to the Home Energy Survey conducted by Eco Quote Today, 72% of UK households have cut back on their gas and electricity use as a result of the cost of living crisis. The energy crisis itself is a cause of worry for 97% of respondents. Consequently, over 65% of UK households don’t believe the government is doing enough about the energy crisis. Seeing as the Energy Price Guarantee is ending in April this year, it’s likely that many people are worried about how they will come to afford their energy bills, when Ofgem price increases were predicted to be worryingly high without any government support.