Three in five households are worried about finances

6th September 2023

A new study from Nationwide Building Society has found that three in five households are now worried about their finances.

The research also found that more than six in ten (62%) are currently worried about their personal finances and ability to cover essential costs, marking the first time it has risen since May. This was up from 57 per cent last month – the lowest percentage recorded since sentiment started to be tracked at the beginning of this year.

The rise in pessimism coincides with a continued rise in household spending. The Nationwide Spending Report – a monthly analysis of more than 242 million debit card, credit card and Direct Debit transactions – reveals £8.90 billion was spent overall in July, including essential and non-essential categories. This marked a six per cent increase compared to the previous year (down from +8% in June), while transactions grew five per cent on last year (down from +10% in June).

While the rise in spend has not yet seen non-essential spend reduce, either monthly or annually, essential costs saw spikes across rent (up 27% year on year), mortgages (+16%) and insurances and credit card repayments (both up 13%). However, the overall rise was muted due to significant drops in fuel spend (-20%) and car finance (-13%), while utility spend only saw a five per cent rise (compared to +15% for June), mainly due to lower energy costs. For non-essentials, the areas which recorded the largest increases were airlines (up 33% year on year), digital goods (+26%) and leisure & recreation (+11%).

The amount spent in July reached around £4.39 billion – a four per cent increase on July 2022. The volume of essential transactions, at c121 million, was up five per cent on July last year. Spending included:

  • Mortgages and Rents: spending on mortgage payments in July was up 16 per cent year on year, while spend on rent payments increased 27 per cent compared to July last year.
  • Credit card repayments: The amount spent on paying off credit card debt rose 13 per cent year on year, while the number of transactions made to pay off debt was 11 per cent higher in July this year compared to the same month in 2022.
  • Fuel and electric car changing: July saw spending on fuel and electric car charging fall 20 per cent compared to the same month last year, likely as a combined result of lower prices at the pump and people travelling less – evidenced by transaction volumes being down four per cent compared to last year. Nationwide data also shows a huge increase in spending on electric car charging with the number of transactions up 72 per cent year on year and spending up 83 per cent.
  • Discount stores: Spend rose by 13 per cent year on year and the number of transactions jumped 24 per cent
    Childcare: Spending on childcare is up four per cent year on year, with the number of transactions 12 per cent higher in July, compared to the same month last year.

£3.29 billion was spent on non-essential items and services, up six per cent on last July. The number of transactions (c111 million) was up by five per cent compared to last year. Spending included:

  • Digital goods: with July being a notably damp month, it’s perhaps unsurprising to see spending on digital goods increased by more than a quarter (+26%) compared to July 2022, with transactions up by 25 per cent year on year.
  • During July, transactions made on console games and in-app purchases made by Nationwide members rose 22 per cent year on year, with spending up 14 per cent as more people used spare time on gaming. Separately, the poll1 of 2,000 people showed that nearly a quarter (24%) of Brits purchased a console game during the month of July, with one in ten (10%) admitting they’d done it more than once.
  • Airline travel: airline travel spend continues to see significant increases compared to last year, likely due to more people travelling abroad for their summer holidays. In July, overall spending was up by a third (33%) compared to July 2022, while there was a 34 per cent increase in the number of transactions compared to 12 months previous.
  • Holiday spending: Nationwide’s data shows a six per cent year-on-year growth in holiday spending in July.
  • Spending data shows that while the number of transactions made by the Society’s members in duty free stores fell six per cent on last year, the total amount spent actually rose by nine per cent as people took advantage of opportunities for last-minute purchases.
  • According to the Society’s poll, nearly a quarter (46%) say they purchase items from duty free when travelling from an airport (8% always do it, 10% often do it, 28% sometimes do it). The top five items to purchase in duty free are: perfumes and fragrances (27%), alcohol (26%), sweets and chocolates (22%), gifts (16%), and beauty products (14%).
  • Leisure and recreation: July saw an 11 per cent annual increase in spending on leisure and recreation as people used the holiday season to attend sporting events, play sports or go to gyms and swimming pools.

Mark Nalder, Payments Strategy & Performance Director at Nationwide Building Society, said “Households are continuing to feel the pressure financially at a time of year when spending is traditionally higher due to the holiday season. Our data is showing that while the nation is able to keep plates spinning, the ongoing rise of essential and non-essential costs are starting to dampen the national mood, much like the UK summer. Whether this translates into a reining in of spending in the coming months is something we will continue to monitor.”

“Significant increases in rent costs, mortgages, insurances and credit card repayments mean households are more focussed on ensuring they have enough to pay the bills that matter most. And with fuel and energy costs down, this is providing a bit of relief at a time of year many will be driving on their holidays and enjoying themselves.”