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Consumer money worries rise as Britain’s debt mounts

28th November 2017 Print

Britain is a nation of spenders. The UK is the second most indebted G8 nation, behind only Canada. Between 2012 and 2017, household debt in the UK increased by 7% to reach in excess of £1.6 billion, according to official government statistics reported by The Guardian

Worryingly, consumer credit is up 19% over the period, too. A combination of credit cards, store cards, loans, and overdrafts; predictions by the Office for Budget Responsibility (OBR) anticipate that this will account for 47% of household income by 2021. 

Adding to the harsh reality of these statistics is the latest findings from personal pension and investment specialist True Potential Investor’s Tackling The Savings Gap Consumer Savings and Debt Data Q3 2017 release. The quarterly report found that 33% of UK consumers worry about their finances at least once a day, while more than half (54%) do so once a week. On average, we worry about money three times per week.

More women worry about money than men. Almost 40% of women have these financial woes on a daily basis, compared to just 26% of men. 

Employment type can also play a part in the frequency of money worries. Interestingly, the employment band that worries most about their finances is actually those in full-time employment with an additional income from a side-line activity (45%). Perhaps this group has had to take on an additional job to pay of their debt, explaining their higher level of financial anxiety.

The frequency of daily financial worries within this employment type is higher than all others, compared to 36% of part-time workers, 34% of self-employed people and 31% of single job full-time employees. 

Family types can also impact the frequency of money worries. Overall, single parents with children under the age of 18 worry most about money, with 41% saying they do so on a daily basis. This is significantly higher than couples with no children (28%), couples with grown-up children living at home (27%) and single adults with no children (35%).

So which group is most comfortable with their current financial position and worries least? Almost a quarter (22.5%) of over 55s said they never worry about money. This is in stark contrast to the 5.5% of 18-24 year olds who said the same. This could likely be a result of where they are in life; 18-24 year olds could be starting out in their careers or saving for a property, while the over 55s are reaching or have reached retirement age and are usually more financially settled.

However, despite the frequency of our money worries, respondents to True Potential Investor’s survey still took out an average of £1,110 of debt in Q3 2017. Despite the warnings from the Bank of England of a “spiral of complacency” in terms of consumer debt, it seems that Brits are continuing to take out new debt, regardless of their pre-existing money worries.

With Brits reluctant to face up to the realities of their debt, the report shows that 90% of UK consumers lie about their finances to hide the scale of their debt, while 86% have openly lied about their debt to their parents, friends, partners and colleagues.

Clearly, debt is having an impact on not only our financial attitudes now, but our financial stability in the future. We’re constantly reminded of the importance of saving towards our pensions and preparing for retirement, so how is our debt impacting our pension pots?

According to data from True Potential Investor’s Q3 2017 report, 45% of people saved nothing towards their pension in Q3 2017. Interestingly, this was most common in the 45 to 54 year old age category, with 47% adding nothing to their retirement funds. 18 to 24 year olds followed closely behind with 44%, aligning with the previous findings of money worries in this category.

The number of non-pension savers has significantly increased compared to figures from the quarter before, where 32% of people did not make a pension contribution. While everyone will have their individual reasons behind why they didn’t contribute to their pension, it could be assumed that a driving factor is Britain’s growing problem with debt.

With the UK’s mounting consumer debt clearly impacting the financial outlook of Brits, it’s important that we do all we can to improve our financial situation. Through clearing our debts as soon as possible, we could free up more available income to contribute to our pension savings, which could have a huge impact on how comfortable we are in later life.