Rising cost of living causes nearly a third of Brits to feel less confident about their financial situation – despite budgeting boost from online banking

5th January 2022

The information contained in this press release is intended solely for journalists and should not be used by consumers to make financial decisions.

Concerns over inflation and the cost of living have more than doubled since the summer, particularly over the cost of groceries, energy and petrol
Despite these concerns, the majority of Brits remain confident in their ability to manage their money, choose the right products and make plans for the future
Particularly high levels of confidence in online banking, with 67% of Brits who use digital services saying they feel more confident with their money
42% say using online banking helps them save money every month – £166 on average.

Inflation and the cost of living are the biggest concerns facing over half (54%) of Brits at the start of 2022, with nearly a third (31%) of people feeling less confident in their financial situation as a result. However, for most Brits confidence in their overall financial situation generally remains steady compared to six months ago, according to the next iteration of the TSB Money Confidence Barometer.

The research, based on responses from more than 5,000 adults, measures the nation’s confidence when it comes to managing their finances. The findings show that 82% of people have already experienced an increase in their costs of living such as increased cost of groceries, day-to-day essentials and gas and electricity.

As a result, almost a quarter (23%) said they have dipped into savings, one in five (19%) said they have changed their usual habits or behaviours such as changing shopping habits and over a third (36%) have cut back on spending on non-essential purchases. 19% have increased debt either by taking out new credit, increasing existing credit or going into their overdraft.

Digital banking continues to boost money confidence

Despite these concerns, Brits’ money confidence in managing their money, making plans for the future and choosing the right products and services generally remains consistent with the previous iteration of TSB’s Barometer, while over a third have increased (36%) or maintained (36%) savings since June 2021.

The research also found that 67% of those who feel more confident using online banking say they now feel more confident with their money as a result of being able to: easily check their bank balance (59%), using it to help with budgeting (30%) and avoid going into their overdraft (18%). 42% say using online banking helps them save money every month – £166 on average.

With 2022 set to be a challenging year for household finances, encouragingly 80% of those surveyed say they’re likely or highly likely to use digital banking.

More Brits than ever turned to Buy Now Pay Later services

The research also shows that more than one in 10 (13%) say that they are struggling, with renters hit the hardest. Of those who are struggling, 83% are renting compared with 15% who are homeowners. Over half (55%) of Brits are likely or highly likely to cut back on spending or switch home suppliers to save money (43%), and 18% may take out a loan.

Against this background, Buy Now Pay Later (BNPL) services continue to grow in popularity, with many consumers using Klarna, Clearpay and others to spread payments or pay later. Over the past year TSB has seen a significant growth in transactions via Klarna. 18%¹ of UK adults now use BNPL at least once a month, with 11% saying they use it at least once a week.

However, research also suggests that some people using BNPL are doing so when they are struggling financially. Of those who use BNPL, 1 in 4 say they rarely have the money in their account to pay in full for the things they are buying.

Mark Curran, Customer Banking Director, at TSB comments: “It’s clear that many people are concerned about the impact of bills going up and rising inflation.

“Now is the time to really get on top of your finances and our research shows that many people are able to save money and budget better by using digital banking. We know that many of our customers need support and we’re delivering new tools and features that will help them to develop confidence with their finances.”

TSB outlines budgeting tips to help Brits to help deal with rising costs

Find out what you’re really spending: with rising prices and bills now is the time to find your where your money really goes. Look through your statements or use the digital tools from your bank to find outgoings like direct debits and subscription services.
Don’t delay in cancelling payments for anything that you no longer need or looking for cheaper alternatives.
Make use of online banking if you can: our research shows that 67% of Brits who use online banking feel more confident with their money as it has enabled them to check their bank balance (59%) and avoid going into their overdraft (18%).
Try Open Banking: our research shows that those who use Open Banking feel more in control of their finances as they can see all their accounts in one place.
Talk to your bank if you need help. TSB offers Money Confidence Experts in all its branches.

MONEY CONFIDENCE BAROMETER

The Money Confidence Barometer reveals that overall financial confidence has decreased slightly since TSB’s last index in June. The Barometer measures an individual’s confidence in managing their money across five different aspects of money management.

Brits scored:

7.1 in their confidence for managing their money in general, down from 7.2 in June.
6.5 in their confidence for making plans for their financial future, down from 6.8.
6.7 in their confidence for following through on financial goals and commitments you make for yourself, down from 6.8.
6.5 in their confidence for choosing the right provider for financial products and services, which is consistent with the previous Index.
6.3 for knowing what different financial products and services are for, which is consistent with the previous Index.

The information contained in this press release is intended solely for journalists and should not be used by consumers to make financial decisions.

Notes to editors

1: Opinium research

Research of 5,000 adults carried out by Opinium between 8 – 15 December, 2021.
TSB offers its customers a multi-channel bank, including full digital (internet and mobile) and telephony capability and a national branch network.
TSB has delivered a number of products and features to help customers better manage their money including:
- The Spend and Save and Spend and Save Plus current accounts include a number of important features to help customers better manage their money such as savings pots, an auto-balancer and an automatic round-up to pay into a savings pot.
- Customers with current accounts can also access TSB’s Monthly Saver Account that pays 2.00% Gross/AER on balances up to £1,500 fixed for a year.
- Digital support comes from TSB Smart Agent – a chatbot that supports customers who bank online or use the mobile banking app.
- TSB’s Marketplace provides customers with tools to manage their money such as ApTap (for comparing utilities providers) and Wealthify (to invest for the longer-term).
- Over 90% of mortgage appointments now use video (compared to 75% face to face and 25% telephony in 2019).
- Over 3,000 colleagues have completed Money Confidence training (accredited by the Chartered Banker Institute) in our branches, contact centres and business banking to support our customers build their financial confidence and capability.