01 February 2024
New data reveals one in five Brits expect to have no spare cash this year
Financial adviser discusses top tips to help those struggling financially
New nationally representative research* from wealth manager Quilter, gathered by YouGov, reveals one in five (19%) Brits expect to have no disposable money available to them in 2024 as the pressures of the cost-of-living crisis continue to bite.
Worryingly, this increased for those age 50 and over, with almost half (46%) reporting that they did not expect to have any disposable money available to them in 2024.
The research follows the latest economic and fiscal outlook from the Office for Budget Responsibility which predicts there will be a 3.5% peak to trough drop in real household disposable income per person between 2019-20 to 2024-25 – the largest reduction in real living standards since Office for National Statistics records began.
Quilter’s research highlights just how difficult it has been for people to weather the cost-of-living storm, and with the UK on the brink of a recession, there are growing fears that more people could struggle financially as we move further into 2024 – particularly the older generations.
Not only does having no spare cash have an impact on people’s ability to spend, but it also has a hugely detrimental impact on their ability to save. Those with no spare cash will be unable to put aside any money to help build a ‘rainy day’ buffer that could protect them should they come across unexpected costs or other financial difficulties, making them even more vulnerable.
For those that find themselves with little or no spare cash this year, Claudia Button, financial planner at Quilter, discusses the important steps to take to help improve your financial circumstances in difficult times:
“Our research highlights just how much of a devastating impact the cost-of-living crisis continues to have on people’s finances, and it is concerning that one fifth of people expect to have no disposable money available to them this year.
“Not only does this mean they will not be able to afford to spend money on things outside of their everyday essentials, but it also means they are very unlikely to be able to put money aside to build an emergency fund. This means should they encounter greater financial difficulty further down the line, they may be more vulnerable to reliance on high interest credit which can be costly. It is important that those who find themselves in this situation take action sooner rather than later in terms of assessing their finances and spending habits, as well as reaching out for support if needed.
Be mindful of borrowing
“If you are struggling to make ends meet, it is vital that you are mindful of your spending habits and avoid accumulating high-interest debt wherever possible as the current high interest rates can make it incredibly challenging to pay off balances in the long run.
“Though debt is not inherently bad, it can be harmful should you have difficulty in paying it off. The Bank of England held its base rate at its latest monetary policy meeting, and it is expected to maintain its ‘higher for longer’ stance for some time yet. As such, credit card users will find it is expensive to carry a balance and individuals with other outstanding debts such as personal loans or car loans could also be facing higher costs.
“Wherever possible, it is important to prioritise paying off outstanding balances as quickly as you can or explore options such as balance transfer, consolidation or refinancing to take advantage of lower interest rates or interest free offers to help lessen the financial blow, and you should seek debt advice where necessary.”
Set yourself up with a budget
“Alongside managing debts, for those with no spare cash, budgeting will be key. Assessing your incomings and outgoings and putting a plan in place to help you budget effectively can help alleviate the stress of managing your money.
“It is a good idea to look back on the past three months of your bank statements to decipher where your money is being spent. This will give you an idea of the regular, monthly payments that go out as direct debits, as well as other outgoings. This may help highlight unnecessary spending and where you might need to make any cutbacks, or even where you have money unexpectedly left over that you could put into savings.
“Once you have a good understanding of your typical monthly finances, write out your budget and allocate specific amounts for the things you will need, making sure to keep it realistic. You will be more likely to stick to a budget if you have a clear plan, but it can also be altered as and when your circumstances change. It would be unrealistic to expect to stick perfectly to your budget every week, but in general you should be aiming to have an overall good month to ensure you are still on the right path.
“Should you find yourself with some spare cash this year, once you have paid off any high interest debts, it is important to start building a rainy day savings pot to act as a buffer should you need it. There are many savings accounts which you can easily access, but the interest they offer on your savings can vary greatly so it is worth spending some time shopping around for the best deal to make the most of your money.”
Seek help if you need it
“Ultimately, if you are struggling financially then the number one thing to remember is that you are not alone.
“Talking about your finances can be difficult, but if you are concerned about your finances then it is important to remember that there is help available. There are many services such as MoneyHelper and charities such as Citizens Advice or Step Change which are available for free support, including debt advice, if necessary.”
*All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,001 adults. Fieldwork was undertaken between 11th - 12th December 2023. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
