Despite some signs that key prices and costs are on the cool down, the cost-of-living crisis has continued to heavily impact millions of households across the UK since the first whisperings of an energy bill price hike in late 2021. With regard to energy bills, significant rises in the cost of gas and electricity saw the number of households in fuel poverty rise to a shocking 6.6 million. This is to say nothing of the steep price inflation that many consumer goods underwent, increasing the burden on household shoppers at an already difficult time.
The cost-of-living crisis is not news to any of us; almost all of us have felt the necessity to cut back on our expenditures, to improve our savings and to attempt to claw back what we’ve lost to the crisis. But not all of us are seeing fruit from our actions in this regard. Despite our best attempts to scrimp and save, the amount many of us are saving is still decreasing – and many of us have turned to borrowing. The difficulty of this situation has given rise to a unique spending pattern called ‘split-brain’ spending; what is it, and how can you kick the habit?
What is Split-Brain Spending?
Split-brain spending, split-brain budgeting, or, somewhat comedically, ‘revenge spending’, is a form of budgeting in which an individual cuts back on expenses where they can – including essential expenses such as food and energy – in order to afford frivolous spending in other areas.
During a time of intense financial hardship for many, and in an environment where meaningful levels of saving, this peculiar form of retail therapy has served as an opportunity for some people to regain some agency over their spending. Where cutting down on small pleasures to afford a larger treat is concerned, this could be harmless fun, but in some instances, financial issues began to emerge elsewhere.
How to Curb Spending and Start Saving
The first step in thinking more with the savings brain than the spending brain is to find the right place to grow your savings. There are many different forms of financial products that could work for you in the short, medium or long term; if your ambitions are to buy a home, even small deposits into a LISA can pay dividends via a 25% return. For simply growing an emergency fund, a high-interest savings account is well within grasp.
With the account there ready to receive your money, it is now your job to change your spending habits accordingly. Pre-setting a savings budget to work alongside your income and outgoings can help reduce temptation, as a direct debit each month could send all your savings money away before you get a chance to spend it. Tracking your spending is also vital, even down to small grocery shops. Impulse purchases add up; and if you can recognise an impulse purchase before you make it, you can consider that money saved!
In Conclusion
There are no simple answers to the cost-of-living crisis, and many of us face months more of uncertainty as a result of increased costs across the board. But these simple suggestions can be hugely helpful in stamping out a dangerous habit before it fully takes root.
