Households build up savings buffer as cost-of-living fears grow

Fears of a surge in living costs are prompting many households to put money into savings.

The crisis in the Middle East has sent oil prices surging - and that opens the door to higher food, energy and fuel costs in the coming months.

Despite this economic uncertainty, more than half (51%) of consumers feel able to manage their day-to-day finances without major stress, according to Barclays.

Nevertheless, figures show that many people are taking steps to future-proof their finances just in case costs soar.

For example, over half (51%) are trying to build a savings buffer.

And more than a third (34%) are reviewing their household budget.

How to build your financial resilience

As economic worries loom large, it’s good to see people are trying to get on the front foot financially.

But for many, that can seem a big task, and where on earth do you begin?

Start small

If you want to build a savings buffer, don’t give yourself a mountain to climb straight away.

Moving even just a few pounds into savings each month could make a big difference in the long run.

Imagine you put aside £1 a day.

Well, that quickly adds up to £30 a month.

Check our tips on how you can get into a savings habit and build that much-needed safety net.

Create a household budget

Look at your income and outgoings, so you can be sure you’ve got money available for essential expenses, as well as see where you can make savings.

Ask yourself questions like:

• Are there subscriptions I’m paying for but not using?
• Could I switch energy or phone providers to save money?
• What small treats or habits could I cut back on, just a little?

You might be surprised where you can free up a few pounds, which could then be saved for the future or help you cushion future price rises.

We've put together a guide on how to create a budget to help you get started - and you can also try our free budget planner.

Check our money saving tips

We’re regularly updating these pages with useful advice on how you can cut costs at home, such as: 

• how to make your money go further
• how to save energy
• how to keep the cost of your food shop down
• 50 ways to cut your fuel costs

It’s also worth checking back here for our round-ups of standout deals and low-cost recipes that can help you save money.

Create a rainy-day fund

Unexpected costs like a broken boiler, a car repair or emergency dental treatment don’t usually come cheap.

So it’s a good idea to create a rainy-day fund - a pot of money set aside for emergencies - so you can cover these costs without having to borrow or dip into savings.

Ideally, you should have enough saved to cover around three months of your living costs - things like rent, bills, food, and transport. 

But even putting away a small amount into your rainy-day fund regularly could make a big difference if or when you ever need it.