If the results contain one clear message, it’s that we need to direct our focus towards encouraging our readers to build up their financial resilience in the context of growing economic uncertainty, caused by the rollout of Universal Credit, Brexit and a volatile global economy. Considering that only 12% of respondents had currently moved on to UC, and with Brexit imminent, the results show that urgent work needs to be done to help the most financially vulnerable protect themselves against potentially imminent financial shocks. The survey also uncovered one demographic group who were most vulnerable to financial hardship – working age people not in full-time employment.
The impact of financial hardship on health and wellbeing:
Among the most shocking results of the survey were the figures around health and wellbeing. Working age people not in full-time employment, (eg, part-time earners, carers and students, as well as jobseekers and people off work through ill-health), reported:
• 48% were skipping meals (full-time workers: 19%)
• 51% were turning off heating despite being cold (full-time workers: 16%)
• 68% felt frightened, anxious or depressed (full-time workers: 34%)
• 32% felt physically ill (full-time workers: 3%)
• 26% faced serious financial problems (full-time workers: 9%)
Although all of these figures are troubling, most striking of all is the huge percentage of those whose mental health suffered due to their financial situation. Amongst working age people not in full time employment, the figure has risen sharply in the two years since our last survey, to an alarming 68% of respondents who said they felt ‘frightened, anxious or depressed.’ This tallies with other research examining the link between mental health and financial hardship, such as work undertaken by the Money and Mental Health Policy Institute. In its official response, delivered earlier this year to feed into the All Party Parliamentary Group for Mental Health’s Five Year Forward View for Mental Health, it said:
‘Financial difficulties can aggravate and even cause mental health problems, as people go without essentials, are unable to do the things that help them stay well, or are harassed by collections agents. The more debts a person has, the more likely they are to develop a mental health problem, even after adjusting for income and other factors.’
This resonates with everything our readers tell us, and is why, following our 2016 survey, we developed ‘The 3 B’s – Banking, Budgeting and Being Online’, a concrete methodology to help promote financial resilience. Our 2018 results show us that, now more than ever, this message needs to be promoted loud and clear.
The 3 B’s – Banking, Budgeting and Being Online.
The 2018 research found:
• More than a third (39%) did not use a mainstream bank account.
• 74% did not save for unexpected expenses, although 30% did use a savings account
• 50% had no home contents insurance, with (58%) blaming cost
• 33% had no PC or tablet access to the internet at home and 11% had no access at all
• Almost half (48%) had fallen behind or struggled to pay bills
Again, these figures are bleak. To some it might seem almost inconceivable that, in the 21st century, nearly 40% of respondents do not use a mainstream bank account. Yet, that is the sharp reality of the situation we face. The fact that almost three quarters (74%) of respondents did not have any savings to fall back on might not seem so shocking considering the sample is made up from those on low incomes. However, it still represents a major challenge when we consider that, for many of these people, the migration onto UC (and the accompanying 5 week minimum period without any benefit payments that entails) is looming into view.
What is clear is that we need to help people to act now, and to foster a pro-active culture of planning ahead to ensure greater financial resilience. This tallies with the approach of others in our sector, such as StepChange, as Grace Brownfield, Senior Public Policy Advocate at the Debt Charity said, in response to the survey results:
“These findings chime with our experience. Among our clients, we are increasingly seeing people behind on basic bills, as a result of trying to cope on a low income. This is particularly true for people who have other vulnerabilities as well as debt. After debt advice, 42% of vulnerable clients who were receiving benefits were still left with a negative budget – meaning they did not have enough money to make ends meet each month. This was higher than clients without additional vulnerabilities (37%). However, the mantra remains true that taking advice early provides the best chance of stopping a debt situation from worsening. Among StepChange clients, four out of five report an improvement in at least one measure of wellbeing (sleeping better, coping better, being less worried about debt) just three months after taking advice.”
We need to encourage everyone to get online, to get a bank account and to start budgeting, in order to help protect themselves against financial shocks. To this end, we’ve produced a new, free resource to help advisers assess a client’s financial resilience, and help nudge them towards protecting themselves against future financial hardship. The Future-Proof Finance Test launches today, and features 25 questions. It can be downloaded by all QIPRO members for free here.
The impact of Quids in!:
In amidst the sombre results of the survey, there is some reason to be cheerful. The positive effect Quids in! magazine, as well as its Guide to Universal Credit and money email service (the Quids in! Readers Club) is having on its readership has jumped dramatically since 2016. The 2018 survey found that:
• 31% found content useful ‘All the time’ (compared to 17% in 2016)
• 55% became ‘more mindful’ of their money (vs 33%)
• 35% would think twice about high cost loans (vs 18%)
• 29% realised they needed help (vs 18%) and 15% decided to get it (vs 8%)
While this represents good news, it also shows how much work there is still to be done. In the ten years since the first issue of Quids in! in 2008, issued against the backdrop of the global financial crash, the number of people facing financial hardship in the UK has increased significantly. As we look forward to the next ten years and the massive challenges ahead, we are more committed than ever before to providing advice and support to those who need it most.
The full report on the results of the 2018 survey can be downloaded for free, here.