Millions of Britons are preparing to take a ruthless approach to their household budgets in the new year, with plans to significantly reduce spending on non-essentials like takeaways, subscription services, and socialising.
Where the Cuts Are Coming
An annual survey of 2,000 adults, conducted by the saving and investing platform Moneybox, paints a clear picture of tightening belts. The data shows that 30 per cent of those making cuts intend to prioritise investing, while 19 per cent aim to achieve their financial goals faster. The areas most likely to face reductions include luxury purchases (29%), fashionable items (29%), and everyday conveniences such as takeaway coffees (18%).
The drive for frugality is heavily influenced by the sustained pressure of rising living costs. The research tracked a 14 per cent increase in monthly grocery bills, jumping from £313.09 to £355.66. Even more starkly, the typical monthly spend on rent and mortgages rose by 24 per cent between 2024 and 2025, from £531.97 to £657.58.
Financial Goals Driving Change
This isn't just about cutting back; it's about redirecting funds towards longer-term security. Many hope their austerity measures will free up cash for key financial objectives in 2026. The top goals include building an emergency fund (28%), putting more money aside for retirement (20%), and funding home improvements (18%).
Encouragingly, the end of 2025 finds many in a resilient position. Despite the economic headwinds, 37 per cent feel they are in a better financial position than at the start of the year, compared to just 19 per cent who do not. This improved sentiment is attributed to making progress on financial goals (31%), better budgeting (28%), and seeing solid returns on investments (25%).
Growing Confidence and Intentionality
The survey reveals a nation becoming more proactive and informed about its money. A significant 57 per cent are optimistic about getting their finances on track in the new year. Among the optimistic, 47 per cent have a plan to save more, and 28 per cent feel more capable of managing their money.
Investment confidence is also on the rise. In 2025, 32 per cent proactively invested their money, with 65 per cent of those feeling more confident than in 2024. This confidence stems from feeling more informed (44%), past good returns (35%), saving more (33%), and improved market stability (25%).
Brian Byrnes, Director of Personal Finance at Moneybox, commented: "Regularly reviewing your spending is one of the simplest and most powerful ways to build better financial habits. Small changes made consistently can unlock money you didn't even realise you were spending."
A Moneybox spokesman added: "What this research shows is that people aren't just tightening their belts, they're becoming far more intentional about their money. Rising costs have forced tough choices, but confidence is growing as people get clearer on their goals and take action."
