The pandemic has highlighted the need to become more financially secure
Brits more confident about their household finances but admit they need to save more. Source: shutterstock.com
According to the Toluna Financial Services Sentiment Indicator, after a tough 18 months, Brits are starting to feel more confident about their personal finances.
In fact, one in three (33%) said that, overall, their household financial situation has improved over the last 12 months.
Meanwhile, 25% of respondents said their household savings have actually increased in the last 12 months. When asked if they are looking to spend this money on a big-ticket item, such as a car, house, dream holiday or wedding etc. over the next year, 52% said that they are not planning to do this.
More importantly, 1 in 4 (24%) of those who say their financial situation worsened in the last 12 months feel optimistic about the situation improving in the next 12 months.
When asked about their top 5 current financial worries, 1 in 4 (23%) mentioned not saving enough or not having enough savings for an emergency/rainy day.
23% also said that they’re worried about not saving enough or not having sufficient savings for retirement.
Almost two-fifths (38%) claim that they would have to borrow from friends and family as their savings would only last one month or less.
While those surveyed said they feel more positive about their current and near-future financial situation, the rising cost of living remains a key concern.
For instance, 34% of respondents are most worried about the rising cost of household bills.
A quarter (25%) cited increasing inflation as a key worry and this is clearly a ‘top of mind’ issue for people and adds to the growing pressure on the Bank of England to act.
Understandably, those who are more likely to say that they are worried about their finances are single parents with children under the age of 18 (91%), those in poor health (93%) and those who have lost a job/become redundant (97%).
But the majority of the UK public don’t completely understand inflation and are not aware of exact inflation figures.
Although many people are feeling the effects of increasing costs on household expenditure, the majority of the public are not aware of exact inflation figures. With over a decade of low inflation and a low-interest environment, inflation has perhaps been a forgotten word in the UK.
When asked if they knew the current rate of inflation, almost half of respondents said they didn’t know (48%). Less than 1 in 20 knew the current rate of inflation.
When asked what is the Bank of England’s target for inflation that the UK Government has set, two-thirds (62%) were unable to answer and again most answered with an incorrect figure.
People also don’t understand the difference between the different measures of inflation such as CPI, CPIH and RPI, with only 14% saying they are clear on what each includes.
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