The FCA’s latest Financial Lives Survey data has revealed that almost a quarter (23%) of people have used savings or investments to cover their daily costs.
The survey also showed that 44% have either stopped saving or investing or have reduced the amount they put away.
Over three quarters (77%) of people surveyed said they’ve been spending less or working more, while 11% of people have no disposable income each month.
However, in better news, only 3% have stopped or reduced contributions to their pension, with only 2% opting to either cash in their pension in full or take out a lump sum to cover daily expenses.
AJ Bell director of personal finance Laura Suter said that while the overall picture is improving, it is “still incredibly tough for many households who are at the sharp end of the cost-of-living crisis”.
“While fewer people are struggling to pay bills and fewer are falling behind with payments than a year earlier, there are still far more people who are struggling financially compared to before the current crisis,” she said.
“The figures paint a truly divided picture. On the one hand, huge portions of the population have blitzed through their savings and are now living month-to-month with no cushion to fall back on: the figures showed that 11% of people have no disposable income each month.
“But on the other hand, that means a very healthy majority of the population have money to spare each month – either to save, invest or spend on luxuries.
“Unsurprisingly, those who are most likely to be struggling with their costs are low-income households, single parents, those who are unemployed and people who are renting. On the other side of the fence, people much less likely to be struggling are earning more than £50,000, retired and/or owning their homes outright.
“It’s easy to say, but people struggling with bills or debt should get some professional support to find out their options. Admittedly, that’s a difficult thing for many people to actually do.
“But anyone who is worried about taking action should get comfort from the fact that people who have sought support are generally happy that they did. Nearly half of those who got help from a lender or charity said they were better off than before, with StepChange and Citizens Advice being the most popular sources of support.”
