As the government grapples with how best to support households facing the biggest cost-of-living crisis in a generation, the evidence already suggests that inflation is having a major impact on personal finances. Cost pressures are squeezing many households’ finances, with four in ten (39 per cent) having already dipped into their savings to cover basic living costs. But as the current climate highlights how fragile personal finances are, it also demonstrates how low financial resilience has become a national issue.
The ability and willingness to save is critical in addressing the long- and short-term financial resilience of individuals and the wider economy, helping households to weather any emergency and fund future life goals. Without savings, those families that are forced to fund day-to-day expenses by relying on personal credit will face a multitude of costs, including on their mental as well as financial health. Recent research from Yorkshire Building Society (YBS) bears this out, highlighting that nearly half (46 per cent) of UK adults are already worrying about the current cost-of-living crisis and the negative impact this will have on their mental well-being.
