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The rising cost of living is having an impact on disposable income, as 41% of Brits had less than £6.60 per day to spend on themselves in June, on average. This marks the second successive quarter in which this type of spending has seen a fall, while bill costs are increasing.
The latest quarterly Spending Report from Nationwide BS furthermore shows that the overall average amount people have to spend on themselves every day is £13.22, with 66% reporting they've had to reduce their spending to pay for essential bills. As a result, people spent an average of £60.76 less year-on-year in the three months to June.
In contrast, they spent an average of £1,510.35 per month on essential bills, which marks an increase of £87.80 compared to the same three-month period in 2017, as 82% saw their bills increase. Respondents highlighted utilities, council tax and the cost of food as the main reasons their bills have gone up.
In response, people are spending less on holidays, recreation, the lottery and unfortunately also charity donations, with the only area to see an increase over the last quarter being eating out. Despite trying to cut back, however, 26% said they regularly outspend their earnings, overshooting their bank balance by £101.84 per month on average.
It then makes sense that 29% are seeing credit cards and overdrafts as an extension of their bank account, as only just over half (52%) of respondents managed to consistently stay within their spending limit. Brits certainly aren't making it too easy to stay out of the red, either, with only 14% willing to cut back on their gym membership, 12% on smoking, 10% on other club memberships and just 5% willing to reduce the cost of Wi-Fi usage.
"Our Spending Report indicates that the rise in essential costs is beginning to have an impact on our day-to-day spending habits," Nationwide's Guy Simmonds said. "Despite the reality that money is tight for some, there are encouraging signs that people are taking the right steps … When things become difficult we'd always advise sticking to a budget, shopping around for the best deals on your household bills, switching supplier to get the best value if necessary and, if you use a credit card, find one that offers zero per cent interest on balance transfers and purchases."
A credit card with an introductory interest-free period on balance transfers gives you time to pay back card debts, while a 0% purchase card can help with essential purchases. If you need both, there's also the top 0% interest credit cards to consider. However, Guy warned: "make sure at least the minimum is paid off each month to avoid additional interest and ensure you are able to pay off the costs in full by the end of the term."
With spending on the rise, it might be a good idea to get back to basics. Have a look to see how much you're getting out of your current account. If you're actually paying a fee every month or year for the privilege, now might be the time to switch to a high interest current account and get the most out of your bank balance.
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