Data from a survey of 2,000 people, by Opinium in October 2025 (except where otherwise stated).
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“Households have been knocked sideways by rising prices in recent years, and while wages have made up some of the lost ground since inflation started to ease, the damage has been done.
The rising cost of living has made it far harder to save – especially for some groups of people – including women, single people, renters and those in the expensive middle years of life (aged between 35 and 54). Almost one in ten have nothing to fall back on in an emergency, and among the hardest-squeezed households, that rises to almost one in five.
To make matters worse, while savings have fallen, the target for how much people need to save has been rising. Financial advisers recommend working towards having enough cash to cover emergency spending for somewhere between three and six months while you’re working age – plus money for any planned expenses over the next five years. Once you retire, you should have cash to cover between one and three years’ worth. As the cost of essentials rises, our emergency savings need to do so too.
Why are people falling short with savings?
A huge part of the picture is to do with the money people have left to save at the end of the month, and income has an enormous impact on that. The HL Savings and Resilience Barometer shows that, on average, households have £155 left and save 4% of their income. However, among households headed by the 20% of lowest earners, that falls to £1 and 0.1%, and among the highest 20% it rises to £761 and just over 10%. It’s no surprise that lower earners fall so far short.
Renters are wrestling with runaway rents over the past few years. The pace of rental hikes has slowed but the cumulative effect of rises has been striking: rents are up 44% over five years, at a time when wages are up 36% on average. Part of the problem is that so much of a renters’ income goes on keeping a roof over their head that any rises have a disproportionate impact. ONS data shows tenants in England spend an eye-watering 36% of their income on rent.
Single people face the additional pressure of having to deal with the so-called singles tax, not being able to share the bills, and paying more than their fair share of everything from council tax to broadband. Many of them are also younger and therefore on lower incomes – a significant chunk are renting too, because it’s much harder to get onto the property ladder on your own. It’s why single people have an average of 23% left over at the end of the month, and save just over 1% of their income, according to the HL Barometer.
When budgets are stretched, it also makes it harder to save. Those aged 35-54 may be on higher incomes on average, but they also have more mouths to feed, bigger homes to pay mortgages on, and face much higher outgoings. It’s one reason why the HL Barometer shows people in their early 30s save a smaller percentage of their income than any other group of working people – aside from those in their early 20s.
What can you do?
Clearly savings targets are a big ask, particularly when times are tight, and among those who are just starting out. However, everyone can focus on doing what they can afford, as soon as they can afford to do so, and every penny they save will leave them better off.
In some cases, it’s possible to cut your costs to create space in your budget.
It’s worth working out what you spend each month, either by keeping a spending diary, or by checking your banking apps and statements. That should help you identify the non-essentials you can cut back on without making a major difference to your life. You should also look at shopping around for better deals on everything from energy to media, to bring your costs down. The aim should be to free up enough money to start putting some aside for the future. This can include savings, pensions and investments, but for those falling short on the savings front, this should be a key priority.
If you’ve hit the wall financially, it’s tempting to try to plough on, but the best thing you can do is talk to someone and ask for help. You don’t have to go it alone. There are all kinds of people who can step in, including organisations like Citizens Advice and debt charities like Stepchange. If you’d struggle to share your position with anyone, you can still track down guides on dealing with the really difficult financial situations from the MoneyHelper website.
