Households spend £2,081 on essentials each month

Latest figures from the Hargreaves Lansdown’s Savings & Resilience Barometer have shown that on average, households spend £2,081 on essentials each month.

The cost of 3 months’ worth of essentials is up £1,028 in two years – and the cost of 3 years’ worth is up £12,339. Spending on essentials varies wildly with income. The lowest fifth of earners spend an average of £749 a month on the basics, and the highest fifth spend £3,352.

Whilst 63% of people have enough emergency savings, this figure falls to 27% among those on the lowest incomes.

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “While inflation has been sprinting ahead for the past couple of years, it has taken everything we’ve got to keep up with our spending commitments. However, now it has slowed slightly, we need to take stock, because there’s every chance we’ve neglected our emergency savings, and they could be lagging dangerously behind.

“Rapid rises in essentials have caused real problems, especially for those on lower incomes. The HL Savings and Resilience Barometer found that the lower your income, the more of it used for the essentials. Some 83% of the spending of those on the lowest fifth of incomes is on essentials, compared to 51% among those on the highest incomes, and 59% on average. It means somepeople have struggled to cut back and have eaten into any emergency savings to make ends meet.

“Even those who were able to cut their costs and stay on top of their spending could have had their emergency savings devoured by inflation. To be financially resilient, while we’re still working, we should have emergency savings to cover 3-6 months’ worth of essential expenses. When we’re retired, that rises to 1-3 years’ worth.

“As the cost of essentials rises, our emergency savings need to do so too. For the average person, three months’ worth of essentials costs £6,243 – up £1,028 in two years. Six months’ worth is £12,486, which is up £2,056. A year’s worth is £24,972 – up £4,113, and three years’ worth is £74,916 – up £12,339.

“These figures give us a useful guide as to the kinds of sums many people need, and are a reminder that your savings may well have fallen behind. However, you’ll need to calculate the right figure for you. Where you fall on the spectrum of 3-6 months or 1-3 years will depend on your circumstances. There’s also huge difference in what people consider essential. This is evident from the fact that the essentials for the highest-earning fifth of households cost around four and a half times as much as the essentials for the lowest earners.”

Average cost of essentials

Period of essentials to cover	Cost in 2022	Cost in 2024	Rise 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