Nearly half of Brits dip into savings to cover everyday costs

A recent survey has revealed that despite household finance confidence growing, a significant portion of Brits are still struggling to make ends meet.

The Compare the Market Household Financial Confidence Tracker found that 45% of people are dipping into their savings at least once a month to cover everyday living costs, with 21% needing to do so weekly.

Optimism rises, but savings still suffer

The tracker showed that 61% of Brits feel more optimistic about their finances compared to this time last year. However, this optimism hasn't translated into financial stability for everyone.

On average, people are raiding their savings around three times per month to afford daily expenses. And 27% of respondents admitted they are unable to save anything at all, with 25% only saving between £100 and £250 each month.

"It is encouraging that people are seemingly confident about their ability to manage and pay their everyday bills in the summer months ahead, signalling a positive outlook on the consistency and reliability of their financial situations,” said Andy Hancock, Chief Growth Officer at Compare the Market

Credit card reliance and holiday cutbacks

The survey also found that many Brits are relying on credit cards to make ends meet. Only 48% of people surveyed regularly pay off their credit card balance in full each month, with 20% only managing to make the minimum repayment on their most recent bill.

To afford everyday costs, people are cutting back on non-essential expenses:

• 42% have cut back on buying clothes
• 36% have reduced holiday spending
• 48% have cut back on eating out

And when it comes to summer travel plans, 41% can afford a holiday in the UK, while only 34% can head to a European destination. With more than a quarter planning to (27%) rely on debt, including credit cards and buy-now-pay-later schemes, to cover holiday expenses this year.

Navigating financial challenges

Compare the Market advised that while credit cards can be valuable for making purchases like holiday bookings, it is important people are mindful of not borrowing more than they can afford. They advise paying off credit card balances in full every month to avoid interest charges.