Home Business News Fewer than half of UK consumers expect their financial situation to improve over the next 12 months

Fewer than half of UK consumers expect their financial situation to improve over the next 12 months

by LLB Finance Reporter
22nd Nov 23 7:05 am

Just 44% of UK adults expect their financial situation will improve over the next 12 months, fuelling a wider sense of unease and discontent.

Of those aged 65+ just 28% expect their financial situation to improve, whilst the younger generations are more optimistic with two-thirds (62%) of 18-21 years olds expecting their financial situation to improve in the next 12 months.

People believe high inflation will last until early 2025, though 16% never expect high inflation to end.

33% plan to ask their employer for a pay rise or look for a better paid job in the next 12 months to offset the impact of high interest rates and inflation and one in five have no ‘cash buffer’ to fall back on in the event of unforeseen difficulties.

This rises to 30% amongst women, which is nearly double the number of men (16%) who have no cash buffer.

Andres Rubio, President and CEO of Intrum, said, “People are still feeling the impact of high inflation and interest rates on a daily basis, from their weekly shop to their energy bills and mortgage payments.

With prices rising, people are looking to their employer to help them keep their heads above water by increasing their wages to compensate. Businesses need to brace for the likelihood that staff will be on the hunt for a pay rise or look for a better paid job to ease the pressure on their budgets and give them some slack when it comes to spending.

With short-term money pressure making long-term financial planning impossible for many, warning signs are plain to see with widespread overspending leading to a heightened risk of problem debt. Losing a grip on your budgeting can quickly become problematic in the long run, with higher interest payments, the risk of additional charges and fewer options to borrow money in future.

People can be forgiven for feeling overwhelmed and unsure where to turn, having endured the pressure of inflation for months on end. Try to keep a clear head and, wherever possible, take small, meaningful steps to keep your long-term finances under control. If you find yourself missing payments or struggling with debt, don’t ignore the situation, speak to an expert who can help you find a solution.”

Six top tips on how to tackle debt

Take stock: Before you try to pay off your debts, get an overview of all your debts, credit and costs. There are free or low-cost tools and apps out there that can help you manage your finances, and most online banks offer overviews of how much you spend in different categories. Reviewing your bank statements can help identify your spending patterns, recurring payments and financial pressure points.

Prioritise: If you find yourself in a situation where you owe debt to more than one bank, lender or business, prioritise your debt. While it may be tempting to tackle your biggest bill first, it might not be the most urgent debt to pay or the one with the highest APR or interest rate. Make sure you’re paying your essential housing and utility costs first.

Consider debt consolidation: Debt consolidation is when you take out credit, such as a loan, to pay off all your existing debts and bring them together in one place. This can be a good option if you want one monthly repayment instead of lots of smaller ones. You may also be able to consolidate your debt to a lower rate than your existing borrowing or find an option that gives you a period of 0% interest. Always seek impartial guidance or advice before going down this path as there can be risks and extra costs involved.

Keep track of your budget: If possible, put away money for annual bills throughout the year so you are prepared for when then are due. Review your subscriptions, insurances and utilities annually to make sure you get the most for your money. You may no longer be on the best deal or may decide you don’t need that subscription any more. Separating your essential from your optional spending will also help you to make informed, conscious financial decisions

Start an emergency fund: Unexpected life events can be stressful and costly. When you are in a position to do so, we would recommend saving some money into a separate pot each month, so you have something to fall back on. We know there can always be unplanned, emergency costs that throw your budget off course. This will stop you needing to borrow money, likely at a high cost, when times are tough, providing some financial security when you need it most.

Don’t suffer alone: If you are struggling to pay your bills on time, ask for advice early. Talk to those you owe money to: lenders will have policies in place to help people who can’t pay, and may be able to offer revised terms such as pausing or reducing payments. There are also a number of independent organisations who can provide judgment free, expert advice – for example, Citizens Advice or StepChange. The sooner you get help for debt, the more options you will have and the sooner you can stop worrying.

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