The Money Advice Service defines indebted individuals as ‘those who are likely to find meeting monthly bills a “heavy burden” and/or those missing more than three bill payments within a six-month period.’ Savings are vital to help smooth household cashflow, and reduce the need for borrowing.
Young people also bear the brunt of a challenging financial outlook. They too find the cost of living to be rising more quickly than wages including the costs of housing and transport. But in addition, they are a generation entering the workforce later, with opportunities to progress deferred to their late twenties. They face the costs of privatized university education, a greater need for care in later life with society living longer, and the need to look after their parents. Mental health problems among first year university students has increased fivefold, with money the main cause.
The poorest or most vulnerable groups rarely have the luxury of choice. Whether they need a short-term loan to tide them over or a longer term, larger loan for bigger items and outgoings, high cost lenders are very often the only source available to them. The poorest households with credit spend a quarter of their budget servicing loans. High cost lenders have saturated poor neighbourhoods and often been found to manipulate consumers. Subsequently, patterns of lifelong debt are emerging.
Talking about money, and taking the first steps to resolve difficulties, is more highly stigmatized in Britain than anything else, leaving many to reach crisis before seeking help.
*Financial Capability Survey 2015, Money Advice Service
**Financial Lives Survey 2018