According to the latest data from Hargreaves Lansdown’s Savings & Resilience Barometer, households in the UK are allocating an average of £2,081 each month towards essential expenses. Over the past two years, the cost of covering three months’ worth of essentials has surged by £1,028, while the expense for three years’ worth has escalated by a staggering £12,339. The disparity in spending on essentials is pronounced across income brackets, with the lowest fifth of earners devoting an average of £749 monthly compared to £3,352 among the highest fifth. Despite the challenges posed by inflation, 63% of individuals report having sufficient emergency savings, although this figure plummets to 27% for those with the lowest incomes.

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, emphasized the necessity of reassessing emergency savings amidst the current economic landscape. While inflation has moderated somewhat, Coles warned against overlooking the importance of bolstering emergency funds, especially given the relentless surge in essential expenses. Notably, individuals on lower incomes bear the brunt of escalating costs, with 83% of their spending directed towards essentials. This underscores the urgency for proactive measures to safeguard financial resilience, including maintaining emergency savings equivalent to 3-6 months’ worth of essential expenses for working individuals and 1-3 years’ worth for retirees.

The escalating cost of essentials underscores the imperative for individuals to recalibrate their savings strategies in alignment with changing economic conditions. With the average cost of covering three months’ essentials now standing at £6,243—an increase of £1,028 over two years—meticulous financial planning becomes paramount. Coles stressed the importance of tailoring savings goals to individual circumstances and needs, acknowledging the diverse spectrum of essential expenses across households. As the financial landscape continues to evolve, proactive measures to fortify emergency savings serve as a vital buffer against economic uncertainties and ensure sustained financial well-being.

Average cost of essentials

Period of essentials to coverCost in 2022Cost in 2024Rise in cost
3 months£5,215£6,243£1,028
6 months£10,430£12,486£2,056
1 year£20,859£24,972£4,113
3 years£62,577£74,916£12,339

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Last Update: April 17, 2024