Home Finance 8.7 million UK adults are ‘financially stretched’ following year of pandemic money worries

8.7 million UK adults are ‘financially stretched’ following year of pandemic money worries

by jcp
  • 17% of UK adults are ‘financially stretched’ – with 10% expecting to see themselves in fall into the same situation in the next 12 months
  • Signs that people have become ‘stretched’ include seeing their personal income decrease (21%), having to borrow in order to pay an essential bill (10%) or being unable to pay it at all (7%)
  • 7.9 million people (15%)2 experienced periods with no disposable income in the last year
  • 12% of UK adults saw their monthly expenses exceed their income in the last 12 months – overspending by £277 a month, on average.

London, Monday 19th July 2021 –New research from Yolt3, the award-winning smart money app reveals today that 8.7 million UK adults (17%) are ‘financially stretched’. A further one in ten (10%) expect to financially struggle in the next 12 months, despite signs of economic recovery, as many households continue to feel the financial impact of the pandemic.

There are many experiences which contribute to someone being considered financially stretched. This can include a fall in income (21% of UK adults experienced this in the past year), experiencing periods without access to disposable income for non-essential spending (15%) or having financial worries that impact their mental health (15%). 28% of people who experienced periods with no disposable income attribute inconsistent pay as a key factor, such as shift workers or those on zero-hour contracts.

Many people considered to be financially stretched also struggle with essential bills (such as, rent or utility bills), either having to borrow money in order to meet these costs (10%) or simply being unable to pay them (7%). More than one in 10 UK adults (12%) saw monthly expenses exceed their income in the last year, leading to an average overspend by £277 a month. These figures indicate that many people in the UK, particularly those who are financially stretched, could see rising household debts. This could also become a particular concern as government support schemes such as furlough begin to end.

However, the figures also indicate that being financially stretched is rarely due to financial mismanagement. In fact, those who are stretched financially are 20% more likely to review their household budget and expenses, keeping closer track of their incomings and outgoing than those who are deemed ‘comfortable’ (89% vs 69%).

Pauline van Brakel, Chief Product Officer at Yolt, comments: “Our research shows that despite restrictions easing and signs of economic recovery, the pandemic continues to have a very real impact on the finances of many UK households. This stretched group, despite showing good financial behaviours such as budgeting, are still struggling. This raises particular concerns when you consider the likely withdrawal of government support later in the year.”

“It’s vital that people who see themselves in this position, and those at risk of becoming financially stretched, continue to engage with their finances, in order to avoid a situation where they lose track of essential bills or see their monthly commitments spiral beyond their control. It can be easier said than done, but beyond reviewing expenses and budgeting, where possible consumers should look to reduce debt, as this not only means alleviating financial pressure, but can mean more money in your pocket in the long run. At Yolt, our free app is designed to help you manage your finances and find potential solutions to your money concerns.”

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