69% are looking to change spending habits due to National Insurance hike.
Two-thirds (67%) of Brits have confirmed that they struggle with their household budgets, reveals a study by NerdWallet, a leading independent financial comparison website.
The survey was conducted to investigate the country’s anticipated financial behaviour in response to the 1.25% increase to National Insurance Contributions (NICs) to be introduced on 6 April 2022, but showed the majority already go over their budget without the financial pressures awaiting them in the new year.
Nine in 10 of those surveyed said they keep track of weekly and monthly spending. Close to half (48%) said they took into account the cost of food shopping, and 39% said they factored in utilities’ expenses. Interestingly, only 27% are budgeting with their rent in mind, and 22% with a view to their mortgage.
Such budgeting looks set to grow more intense in 2022. Ahead of the NIC rise, 69% of people said they were ready to make changes to their spending in a variety of areas. And more than one in 10 surveyed (13%) felt the need to introduce a budget to address their spending as soon as this winter in preparation for the impact of increased NICs.
Nearly a quarter (24%) of respondents were looking to switch to cheaper shops and supermarkets, while 19% were considering reducing the weekly food shop overall.
People were also evaluating potential changes to their non-essential spending, including cutting back on meals and take-aways (21%), social activities (16%), gym and club memberships (9%), and holidays (13%).
The festive period, which is traditionally an expensive time of year, is also being reconsidered – with over one in 10 intending to buy less this Christmas.
Connor Campbell, personal finance expert at NerdWallet, says: “While the National Insurance hike will hit households very differently up and down the country, it is arguably one of the smaller hurdles in a growing list of financial pressures facing Brits as we head into the new year. That is why it is good to see people already thinking critically about the hows, whens and wheres of their household expenditure.
“With rising inflation and a costly energy crisis under way, the sooner you can get your budget in order now, the better prepared you will be for the changes and challenges – both known and unknown – set to arrive in 2022.”
Budgeting is not a conscious concept in every UK household: one in 10 respondents claim not to have one at all. A third of respondents, meanwhile, always go over budget, and a similar amount (34%) admitted that they are forced to make a budget work, despite facing financial struggles.
Experts at NerdWallet recommend the 50/30/20 rule to manage household budgets. The 50/30/20 rule is a recommended way to divide your take-home pay as follows:
∙ 50% on essentials, such as rent, mortgage, bills and food
∙ 30% on wants and non-essential spending
∙ 20% on paying off debt or paying into savings
NerdWallet has put together a guide on what the new National Insurance rates are, how much will end up coming out of wage packets, and what individuals can do to help manage any changes to personal finances.
NerdWallet’s budgeting 101 guide can help create a realistic budget that accounts for all of your expenses: https://www.nerdwallet.com/uk/personal-finance/how-to-budget-money/
To find out how the National Insurance increase might affect you, head to: nerdwallet.com/uk/personal-finance/rise-in-national-insurance-contributions/
Notes to editors
These findings were sourced from a survey of 1,000 employed people residing in the UK from 13 to 14 October 2021.
These are the top-ranked answers from survey respondents when asked to choose from a selection of financial behaviours based on the question “As an individual, how do you think the National Insurance hike will impact your financial behaviour because of a reduced income?”
If you’re going to write a piece based upon the findings or share the research, please credit NerdWallet: https://www.nerdwallet.com/uk/personal-finance/rise-in-national-insurance-contributions/
2021 Median Salary: Source
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