How Much Disposable Income Do Brits Have Given the Cost of Living Crisis?

Everyone is feeling the financial pinch due to the cost of living crisis. But how much disposable income do Brits have?

New data from Share to Buy reveals there has been a 45% increase in people reporting they have no disposable income compared to before the pandemic. Nearly one in five people currently have no disposable income, and so our spending habits and the way we shop have changed.

Our expenditure is dropping but prices are rising

With the cost of living increasing, expenditure seems to be dropping, which as a result means our lifestyles are changing too. When asked what the biggest deterrent was when spending their savings on what they want, 28% of people said it was because of the price of goods and services rising and 27% said it was because of higher taxes and bills. Only 12% said it was due to a lack of savings in the first place.

This tells us that the cost of living is deterring people from spending their savings on what they want – instead, 30% of people have to spend their savings to meet higher living costs.

Where Are We Spending Our Money?

With the cost of living at an all-time high, 37% of people are swapping products they previously bought for low-cost alternatives when grocery shopping. This is just a small peek into how spending habits are changing.

I for one am trying to move all my shopping to Lidl rather than higher-priced superstores, and planning out my meals to avoid financial and food waste. Not to mention, doing challenges like No-Spend September 2022 to cut back on needless spending and develop my savings.

A further 67% of people have reduced the amount they spend on clothes, and following close to this, 65% are cutting back on eating out, and a shocking 51% of people are spending less of their disposable income on weekly groceries. The way we spend has become riddled with caution.

Millennials and Gen Z see a different reality post-pandemic

Millennials and Gen Z utilised their time in lockdown for self-improvement on a personal and professional level. Between a quarter and a third claimed to have built healthier habits as well as decluttering (and selling possessions they no longer needed) and improving their finances. The lack of experiences available to them as consumers meant a complete change in spending habits, while some took the opportunity to move out of city centres during the pandemic.

Now that lockdown is over, there’s a stronger appetite for heading out and enjoying those experiences again from Millennials and Gen Z. Almost half of this age group is expected to eat out at restaurants, attend events and visit concerts more often than before the pandemic. They also looked to travel as much as they did pre-pandemic.

However, it’s not all positive news on disposable income after lockdown for this group of adults, as Millennials and Gen Z alike feel less hopeful about their own future financial situation.

What am I doing to deal with the cost of living crisis?

On top of changing my shopping habits and attempting to cut back dramatically on little spends, I’m still allowing myself some big treats as a result of the pandemic. Between 2020 and 2021 our lives were on pause and I’m definitely playing catch-up. But, as the October energy bill increase approaches I’m planning on cutting back on life-experience expenses as well.

Time to really consider where my money is going, from canceling subscriptions to multiple streaming services to upping my monthly savings intake to ensure I have a safety net if any unexpected bills pop up. For the next few years, I think we’re all going to be feeling the pinch.

Disclaimer: This was a partly-contributed post, which I agree with wholeheartedly.

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