Over half of UK adults are struggling with their finances and find it difficult to keep up with debt repayments and monthly bills, according to a new …
Over half of UK adults are struggling with their finances and find it difficult to keep up with debt repayments and monthly bills, according to a new study from Money Advice Service.
Some 52 per cent of the 5,000 people surveyed admitted they were in trouble financially, compared to just 35 per cent in a 2006 study.
The report, named the Financial Capability of the UK, found millions of people are suffering from poor financial skills and the continued squeeze on families has left individuals unable to save money for their future.
Money Advice Service said attitudes, motivations and opportunities are more important than skills and knowledge, in shaping the way they manage their money. For example, one in five people would rather take £200 now than £400 in two months’ time, revealing how individuals are living for today instead of tomorrow.
However, far more people are consistently checking their bank statements thoroughly, with 54 per cent regularly looking through all entries, compared to just 36 per cent in 2006.
Encouragingly, while more than half are struggling to keep up with bills and repayments, over three-quarters claimed they are never late paying them. Although, over a third of respondents said they have cut back on their spending in the run up to payday.
Parents in particular are really finding it difficult, with 44 per cent having to make large cutbacks and this figure is even higher if they receive benefits.
The report said: "there is a general feeling that individuals worry about their ability to make their money last until payday."
"Because of this, people are focussing more on the here and now than on planning for the future, including for unforeseen emergencies."
According to the report, this is having a knock-on effect on people paying into pensions and life insurance, with less than a third doing so.
Some 62 per cent claim they make sure they have some money saved for a rainy day, but this is a significant reduction from the 75 per cent who said the same in 2006.
One of the major causes of this is likely income, with the per hour rate dropping by six per cent in real terms since the previous research was carried out, making it a lot more difficult for people to make ends meet.
Caroline Rookes, chief executive of the Money Advice Service, said: "In theory, money management is easy – spend less than you earn and consider your future, but the difficulty comes when applying this in the real world. This report reveals just how difficult it is at the moment for so many of us, but also highlights ways we are adapting to manage financially."
On a positive note, 84 per cent of those questioned keep track of their income and expenditure. This is important to ensure enough money is left to pay for everything in the month.
It is concerning so many UK adults are struggling to keep up with their repayments and people could potentially reduce the amount they pay each month by taking out a debt consolidation loan that would free up money to pay for other things.
By Amy White
Find out more about money management on the ClearDebt blog.