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Four in five households forced to make cutbacks before Christmas

Whilst Brits are being lured into spending heavily to kick start an online festive frenzy, new research from AA Financial Services reveals that the proportion of households looking to make their salaries stretch further by adopting a range of cost-cutting initiatives has soared in just three months (from 54% to 79%).

At a time when the nation adjusts to the new era of interest rate rises, rising living costs and stagnating wages, the AA data reveals that the proportion of people trying to reduce their monthly commitments continues to rise quarter on quarter – up from 49% in the spring and 54% in July to 79% before Christmas. Set against the context of more Britons cutting back whilst being bombarded by festive campaigns to spend, AA Financial Services warns that many households could be sleepwalking into financial crisis in 2019 if they get carried away by the hyped pre-Christmas sales.The top priority when looking to pinch the purse strings was to shop around for a cheaper utilities supplier (40%), while 28% of respondents said they are looking to save money on their home insurance and 25% planned to switch to cheaper supermarkets. Some of the figures have doubled in just three months.

The domestic economy drive is most prevalent among parents of young children, where the cost of raising a family is causing the greatest financial strain. Overall, 89% of parents with children under the age of four – were looking to make financial cutbacks. This compares with 84% of parents with adult children and 79% of adults with no children.

David Searle, the AA’s Director of financial services commented: “The quarter on quarter increase in the proportion of households looking to save money on their fixed monthly commitments is a clear indication of the squeeze many are feeling, as salaries fail to keep up with the cost of living. Many people start a New Year with resolutions to get their finances in shape, and it’s important in this new era of pre-Christmas retail sales that consumers don’t let the festive period land them in a position of difficulty for 2019.”

“Further, looking at the cutbacks people are looking to make, few are extending their savvy shopping to the financial products they currently hold. For many, reviewing their mortgage, their credit card or loan arrangements is a direct and meaningful way to reduce their monthly commitments.

“For anyone looking to save money this Christmas – or to make their money go further – we encourage people to challenge AA Financial Services to see how we can help.”