Households ‘taking drastic measures’ to reduce spending

Chancellor George Osborne detailed his Budget this week and a new report has also emerged revealing the tough measures facing households across the UK.

The Real Budget Report, which features the findings of a survey performed by MoneySupermarket.com, revealed the adjustments people have made over the past year and also the sacrifices they will make in the coming 12 months in order to make ends meet.

More than three quarters of consumers (76 per cent) have limited their spending over the last year, with 65 per cent cutting down on luxury purchases.

People are now eating out less, reducing the number of takeaways they order and are staying indoors instead of going on days or nights out. Almost half of respondents (45 per cent) have cut back on holidays as a result of a lack of finances, while a further 17 per cent have cancelled leisure membership programmes.

As people's money situation worsens they are taking drastic measures to ensure their families get by. Over a third of respondents (38 per cent) said they had cut back on necessities in the last 12 months.

Of these people, one in ten (11 per cent) said they have skipped meals to ensure their children are properly fed, while 17 per cent have racked up credit card debt or left energy bills unpaid to free up money.

When struggling with finances, many people turn to cheaper alternatives in the supermarkets and the findings have reflected this, with 71 per cent now choosing to buy supermarket own-brand goods over the more expensive brands. Some 45 per cent are also seeking out money-off vouchers from newspapers, magazines and on the internet in an attempt to save money.

Over half of participants (55 per cent) said they turn off their heating to save on energy bills, even when it is cold, putting the most vulnerable at risk.

Increasing income is seen as a major priority for people as debt begins to mount up. People are doing this in various ways, including working more hours and selling household items on internet auction websites or at car boot sales.

A third of people (34 per cent) are anxious about their finances and don't see things improving any time soon. Some 12 per cent said they are worried about being able to provide for their family, with a further 16 per cent concerned that many future bills will be left unpaid. Many people are turning to debt consolidation loans in order to restructure their finances and free up money.

Editor-in-chief at MoneySupermarket Clare Francis said: "Household finances are taking a battering from all sides at the moment. Average incomes have fallen in real terms over the past four years, the cost of heating our homes continues to rise and food prices and motoring costs are also taking their toll on family budgets.

"In order to free up some vital cash, UK households need to take control of their finances, become their own chancellor and review all of their financial products to make sure they are benefiting from the most competitive deals on the market."

It appears these austerity measures will continue well into 2013, with 69 per cent of people still planning to cut back in some way over the next 12 months.

By Joe White