Scots bolster savings and brace for next wave of cost increases

• TSB sees cautious Scots saving more and scaling back credit card spending: with eating out, holidays and socialising taking the biggest hits
• Bank’s survey finds one-third of Scots are concerned they won’t be able to cover day-to-day living costs
• Only one-in-five Scots are confident they can save for a comfortable retirement
• Middle-aged Scots are the most concerned about their domestic finances, with nearly half of 45–54-year-olds worried about their current financial situation
• Young Scots are the most optimistic about their financial outlook, with more than a third of 18–24-year-olds believing they will be better off 12 months from now.

Scots are moving cash into savings, cutting spending, and opting for longer mortgage terms as they brace for a new wave of cost increases this month.

Analysis of TSB customer accounts has shown that savings balances rose by 6% between October 2022 and February 2023, while current account balances fell 4% in the same period. Fewer customers fell into arrears – a sign that household finances are increasingly resilient – and the number of transactions on credit cards fell by 13%.

Spending via ‘Buy Now Pay Later’ providers also fell 11% over the period and was down 32% from its Christmas peak (1 December 2022). The number of people taking out new mortgage applications over 35 years or more doubled, from 7% to 13% year-on-year.

This month, TSB’s latest Money Confidence Barometer survey found that nearly seven-in-10 Scots (68%) believe they are worse off than they were a year ago, with just one-in-10 considering themselves better off now. One-in-five (20%) reported no change.

As Scottish households brace for the impact of rising council taxes, phone and broadband bills, and the change in energy bill support coming into force this April, the new data reveals that a third of Scots (32%) lack confidence that their household has enough money to cover day-to-day living costs, such as buying groceries and paying for transport.

A similar proportion (28%) are not confident their household can pay its fixed monthly outgoings, including rent, mortgage, bills, and Council Tax.

Nearly half of respondents (46%) lack confidence that their household would have enough money to pay for unforeseen household expenses, to replace appliances, for example, or cover car repairs and other unexpected bills.

Just one-in-five Scots are confident they can save for a comfortable retirement, with more than half (53%) lacking confidence in their ability to do so.

These concerns have seen more than eight-in-10 (82%) Scots reduce or stop spending on non-essential items to help manage household finances, with the most behavioural changes as follows:

• More than half (52%) have cut spending on eating out or getting takeaways
• 39% have reduced leisure activities, such as socialising, and days out
• 37% have cut back on holidays, both in the UK and abroad

Middle-aged concerns and the optimism of youth

Scots between the ages of 45-54 are the most concerned about their domestic finances, with nearly half (48%) reporting that they feel worried about their household’s financial situation. Those aged 66-75 are the most comfortable, with fewer than a quarter (24%) describing themselves as worried about household finances.

The 45-54 age group is also the least optimistic about its future financial situation, with less than one-in-10 (9%) expecting their household will be better off a year from now, while two-thirds (64%) of that demographic believe they will be worse off. Young Scots are the most optimistic, with more than a third (37%) of 18–24-year-olds believing they will be better off 12 months from now.

Of those who expect to be worse off a year from now, three-quarters of respondents believe paying more for food shopping and other household bills, including utilities and broadband, will be the most significant contributory factors.

Mark Curran, Customer Banking Director at TSB commented:

“From locking into longer mortgages and reducing spend on credit, Scottish households have taken decisive steps over the last quarter to boost their savings. It’s encouraging to see Money Confidence move in the right direction.

“However, this doesn’t come without sacrifices and money worries. While many are feeling more financially resilient, some are struggling to meet day-to-day living costs and our Money Confidence Experts are introducing more ways to help TSB customers manage their money better.”

To help reduce the nation’s money worries and improve money confidence among those hardest-hit by the cost-of-living crisis, TSB is today announcing new support, including:

• Lightning Reach, a free one-stop online portal, that identifies and provides access to financial support such as benefits, grants and local discretionary funds – uniquely matched to individuals. Customers can register to see a range of support they may be eligible for in one place and easily apply for multiple types of support directly through the portal. Lightning Reach can now be accessed on TSB’s Money Worries web page.
• Seven-days-a-week video-call service with TSB Money Confidence Experts to help customers manage debt and budget; review their finances to help pay important bills; and help with everyday banking tasks like online banking. Appointments can be made on TSB’s website.