The average consumer expects their debt to rise 11% to a staggering £3,834 in just a matter of months, as Brits continue to grapple with the cost-of-living crisis. The Cost-of-Living Report by savings site, VoucherCodes.co.uk, examines the impact of the crisis on British consumers. The findings show that over half (58%) of the population is currently in debt and this isn’t set to improve anytime soon.
The Bank of England recently reported the rate for all consumer credit jumped a staggering 5.7% in April. Data from the VoucherCodes Cost-of-Living Report reveals that the average Brit estimates their debt is set to rise £377 per month due to the crisis gaining pace, increasing from £3,457 to £3,834.
Further analysis of this increase in credit shows those who bring home an income of £50,000 - £59,999 expect to see their debt grow 14% to £5,081, more than any other income bracket. At the other end of the spectrum, those households that fall into the next income bracket of £60,000 - £69,999 predict they will see the smallest increase to their total debt, at only 9.3%, bringing them to a total of £5,024.
However, when looking at debt increases proportionate to household income, it is low-income households earning between £15,000 - £19,999 who are the hardest hit. It’s expected that their average debt will total 19.2% of their income, compared to only 5.1% of high-income earners bringing home between £100,000 to £149,999. Unsurprisingly, as debt increases, Brits report a drop in disposable income. Consumers are bracing themselves to lose £124 per month in disposable income, equating to a total loss of £1,488 annually.
As disposable income levels drop rapidly, it’s those with a total household income of £15,000 - £15,999 impacted the most. It’s expected they will lose £1,368 annually, which equates to 9.1% of their salary. Unsurprisingly, those households earning £100,000 - £149,999 will only see their disposable income decrease by 1.6%, amounting £1,610.
Savings pots are also expected to take a hit with the average consumer forecasting they’ll have £1,332 less within the next year. Almost a third (31%) are now also unable to put any money into savings due to the financial strain created by the crisis.
Anita Naik, Saving Expert at VoucherCodes.co.uk said: “The inflation of living costs is a crisis felt by many across the UK and VoucherCodes’ Cost-of-Living Report clearly shows people across the nation are currently experiencing a considerable level of financial strain with no end point in sight. This is shown by our research which indicates 88% of Brits have already seen or expect to see a negative change to their financial situation. With the average consumer seeing their disposable income drop substantially and their monthly outgoings increase drastically, people are being forced to make sacrifices to purchase necessities for themselves and their families.
“The changes brought on by the crisis are having a profound impact on consumer spending and already perceptions of what makes a luxury item are changing. Items which have previously been taken for granted, such as food takeaways and entertainment services, are some of the many items that Brits now deem to be an extravagant expenditure.
“If like many, you are looking for ways to make your money stretch further, there are a few simple things you can do to help keep your month-to-month expenses down:
· Before you head to the supermarket, check VoucherCodes for grocery deals and promotions – there are often discounts available, particularly if it’s the first time you’ve shopped online with that supermarket. When you’re at the shop, make use of loyalty scheme discounts and the reduced section for bargains, anything you don’t use on the day can be thrown in the freezer for later – even things you may not think of freezing like cheese and eggs.
· Getting your hair cut is often expensive, especially if you have long hair. Mobile hairdressers are also an excellent alternative to salons when it comes to cost, they are well-trained and may have even worked in some of the big salons but have gone freelance for lifestyle reasons. Their prices are lower than the salon as they come to your house and use your products, water, and energy. Therefore, their overheads are lower. Look on local Facebook groups for recommendations in your area.
· Fruit and veg can be an expensive portion of your weekly shop, but careful choices here can easily help to lower your weekly food costs. Most of us go subconsciously reach for perfect looking fruit and vegetables in the supermarket, however, there are many delivery services and some supermarkets which offer wonky fruit and veg boxes at a lower cost – and this is a great sustainable option too!”
