Around 7 million Brits have already had to dip into savings to cover monthly bills and 6 million of the UK’s lowest earners have had their mental health impacted by the cost-of-living crisis – 132% more than those earning more than £55,00 whilst 1.27 million middle earners are concerned about their personal savings.
From the living wage to energy bills, the Autumn budget made several substantial changes that will impact the finances for households across the UK. But how well does the new budget tackle Brits’ greatest financial concerns?
As part of their cost-of-living statistics report, the personal finance experts at money.co.uk sought to investigate the biggest financial concerns across different wage salary types. To do this, they analysed the worries for low (£15,000 – £25,000), middle (£25,001 – £45,000) and high (above £45,000) UK earners, as well as how effectively the Autumn budget could alleviate their concerns.
Monthly bills are Britain’s biggest financial concern
Paying monthly bills during the cost-of-living crisis is the biggest financial concern of all wage brackets analysed, representing 13.14 million, or 45% of UK workers. Furthermore, over a fifth (6.60 million) have had to use savings to cover monthly payments for energy and water.
Across all the 3 wage brackets analysed, this concern is most common among low (£15,000 – £25,000) and middle earners (£25,001 – £45,000). Just 2.30 million (39%) of the highest earners are worried about monthly bills – 60% less than low earners.
Lower earners are most concerned with rent payments
Despite concerns with energy bills, low earners (£15,000 – £25,000) are more worried about their rent than any other wage group. An estimated 1.65 million (13%) are concerned about their rent payments. When asked how they are coping with the cost-of-living, this wage group cited overdrafts the most, with 2.20 million (18%) of Britain’s lowest earners relying on their overdraft to cover essentials.
Furthermore, the cost-of-living statistics report revealed that 6 million (48%) Brits in this wage bracket have had their mental health worsen as a result of the current cost-of-living.
Middle earners are most concerned with personal savings
Personal savings are another big concern for Brits earning £25,000 – £45,000, with 1.27 million worried as their assets cannot match rising interest rates. Additionally, almost a quarter (2.52 million) of middle earners had to use their savings to cover essentials in the last year. In comparison, the highest earners (over £55,000) are less worried about their savings, with under 9% citing them as a major concern.
Highest earners are most concerned with paying their mortgage
Apart from energy bills, just under a million of the highest earners (above £45,000) are concerned about their monthly mortgage repayments. This is the highest proportion of any wage analysed. Despite less than a million (13%) having no financial concern at all, three million (44%) of the UK’s highest earners have had their mental health worsen due to the cost-of-living crisis.
How well does the Autumn statement address Britain’s financial concerns?
Concerns around monthly bills are likely to continue over the coming months, as the Autumn budget promised to provide assistance beyond April 2023, when energy bills are expected to rise to an average of £3,000.
The Autumn budget announced rent support for lower earners, as social rents were capped at 7% for 2023/24 – which is likely to be welcomed by the two million lower earners concerned about rent payments.
Middle earners concerned with personal savings are unlikely to feel less worried following the Autumn budget. As interest rates are predicted to rise as high as 4.8% in July of 2023, those with money saved up will likely see its value decline, with no support from the government laid out to mitigate their losses.
Lucinda O’Brien, savings expert at Money.co.uk, gives guidance on what to do if you’re unable to pay a bill.
O’Brien said, “As more and more people are becoming concerned with how they’re going to pay their bills every month, it’s important to know what steps you can take if you do find yourself unable to make a payment.
“Don’t ignore the problem. Being unable to pay a bill is stressful, but the problem can escalate if you don’t tackle it sooner rather than later. Rather than bury your head in the sand, make contact with the company that sent the bill – they’re likely to be more understanding if you’re upfront and honest about your circumstances.
“Prioritise housing and council tax. No one wants to miss a bill, but failing to keep up with your rent, mortgage or other debt payments secured on your home can see you evicted. That makes these bills a priority. Council tax is the only bill you can be imprisoned for failing to pay – so that’s another bill you need to pay attention to.
“Keep paying what you can, if you can. Even if you can’t pay off the entire bill, paying what you can will demonstrate that you are committed to clearing the balance eventually. This will also reduce the amount you owe, and therefore mitigate any increases on the bill if interest builds on the outstanding balance.
“Get help. If you’re struggling to control your finances, there are several not-for-profit organisations that can consider your personal circumstances and offer you free, bespoke advice. StepChange, National Debtline or CCCS are all dependable examples.”