As 2025 concludes, a significant number of British households are entering the new year with a surprising financial confidence, even in the face of steep living costs. A major annual study indicates a strategic shift in money management is underway, with many planning to double down on frugality to achieve their long-term aims.
Unexpected Gains Amidst the Cost of Living
Four out of every ten UK adults report being in a better financial situation now than they were at the start of the year. This improvement comes despite significant pressures, including monthly grocery bills that have jumped by 14% and rent or mortgage payments climbing by a substantial 24%.
The resilience is attributed to several key factors. One in three respondents benefited from a pay rise over the year, while one in five managed to reduce their personal debt levels. Furthermore, improved household budgeting and solid returns on investments have played a crucial role in bolstering financial health for many.
The 2026 Austerity Plan: Ditching Luxuries for Goals
Looking ahead, however, this newfound stability is not leading to complacency. The survey of 2,000 adults, conducted by the saving and investing platform Moneybox, reveals a widespread intention to get "cutthroat" with non-essential outgoings in 2026.
Popular targets for reduction include:
- Takeaway meals and food deliveries
- Unused digital and entertainment subscriptions
- Regular nights out and social spending
- Daily luxuries like takeaway coffees
- Purchases of luxury and fast-fashion items
The motivation behind this belt-tightening is highly goal-oriented. One third of those planning cutbacks aim to free up cash to prioritise investing, while a fifth are focused on smashing their financial targets as rapidly as possible. Common primary objectives for the released funds include building a robust emergency savings pot, saving for retirement, and funding home improvement projects.
Growing Confidence and Intentional Money Management
The research paints a picture of a population becoming more proactive and informed. Overall, 57% of those surveyed are optimistic about getting their finances fully on track in the new year. This optimism is backed by action:
47% of the optimistic group have a concrete plan to save more money. Furthermore, 28% feel more capable of managing their money than before, and 26% have set clear financial targets for 2026. A dedicated 24% report feeling more motivated to take control, and 15% are committed to investing more regularly.
This confidence is reflected in investment behaviour. In 2025, 32% of respondents proactively invested their money, and of those, 65% felt more confident doing so than in 2024. For 44%, this confidence stemmed from feeling better informed, while 35% were encouraged to return to the market after previously enjoying good returns.
Brian Byrnes, Director of Personal Finance at Moneybox, emphasised the power of small, consistent actions. "Regularly reviewing your spending is one of the simplest and most powerful ways to build better financial habits," he said. "Small changes made consistently can unlock money you didn't even realise you were spending."
A spokesman for the platform summarised the trend: "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." The message is clear: for many Brits, 2026 will be a year of focused financial discipline, turning careful budgeting into tangible future security.
