Consumers need a minimum of £44,000 in savings to avoid having to make changes to their spending habits as a result of the cost-of-living crisis, according to Hampshire Trust Bank’s Savvy Savers research.
28% of respondents have not made any changes to their financial behaviour throughout the crisis. Instead, this group relies on an average savings pot of £43,528 – a figure that is significantly higher than the average savings of all respondents (£39,883) and substantially more than the majority of the UK population. Recent government figures show that 42% of families have no savings at all.
However, the average amount held in savings is still considerably lower than what most respondents say they need to feel financially secure. With 24% of respondents indicating they would need more than £100,000, and a further 11% indicating they needed £50,001- £100,000, savers are depending on having substantial financial reserves to weather the cost-of-living crisis.
Stuart Hulme, managing director, savings at Hampshire Trust Bank, said: “Although wealthier savers haven’t yet felt the need to radically change their spending habits, our research tells us they are becoming more concerned about the cost-of-living crisis. With no easy solution to the current crisis in sight, those who we refer to as being the ‘squeezed middle’ are likely to grow in number, and will include more affluent savers who traditionally held more savings in the bank.”
Hampshire Trust Bank said it is clear that most Britons do have concerns about the cost-of-living crisis, with 70% stating that rising utility costs is among their biggest concerns. In a similar vein, 53% stated that the rising cost of fuel is high on their list of worries, while a similar proportion (51%) noted the same of the climbing cost of food and drink.
As a result, most Brits are cutting back on their spending habits, impacting their day-to-day spending across a variety of fronts. 53% are spending money carefully day to day, 18% have changed where they bought their food in the last six months and 23% of respondents only drove their cars when necessary.
Hulme added: “Whilst this more affluent group has taken a little longer to start feeling these impact, our research shows they are indeed starting to be concerned about the impact of rising costs – especially (as with the rest of us) the impact of climbing utility bills and fuel costs. This growing group of savers will need to assess the liquidity of their assets and work out the best balance of short and long-term in their savings and investment portfolios to be prepared for what looks set to be a prolonged period of inflationary pressure and associated rising costs.”