Rising cost of living crisis

3 tips to maintain your financial wellbeing.

The rising cost of living is one of the most pressing issues facing many families today. The price of food, energy, fuel and other necessities has risen significantly in recent months. This has made it difficult to make ends meet and has put a strain on many household budgets.

Planning for the rising cost of living can be a challenge, especially if your income isn’t keeping up with inflation. As many people feel the squeeze as the cost of essential items continue to increase, there are a few important things to consider to maintain your financial wellbeing.

1. Review spending

The rising cost of living can be a real problem, especially if you’re not mindful of your spending. Going through your spending with the finest of tooth combs can help you find areas where you may be able to cut back, and save money in the long run. Keep an eye on your budget and make adjustments as necessary to ensure that you are aware of your outgoing costs and can adapt your spending accordingly. Being able to see exactly where your money’s going will help you to pin down where you can make savings and cuts.

Ask yourself, what’s coming in and going out? Can I get something for cheaper? And (often the hardest of all) do I really need that? Look at the money you have coming into your home – whether that’s just you or with someone else. You want to look at every single thing that’s going out (there may be a lot more than you think).

2. Emergency savings

When it comes to financial security, one of the most important things you can do is to keep emergency savings aside for when you need it. Having a nest egg that you can tap into in times of need can help you weather a storm. One method is to create a dedicated savings account that you only use for this purpose. This way, you can easily access the funds when you need them but they remain out of reach for everyday spending.

Aim to build up enough to cover between 3 to 6 months’ expenses, or as much as you can afford. The best thing to do is make room for your savings in your budget as one of your outgoings. By doing so, it’ll help you see your savings as a must, rather than a must do later. And if you can, set up an automated payment from your normal bank account straight into your savings account – that way you don’t even need to think about it.

3. Pensions and investments

As many people across the country are feeling the squeeze of a cost of living crisis, it’s more important than ever to make sure your finances are in good shape. One way to do this is by making sure you don’t touch your pension or investments. While it may be tempting to dip into these savings to help make ends meet in the short term, it’s important to think about the long-term impact this could have on your retirement plans.

Drawing down on your pension or selling investments could leave you worse off in the long run, so it’s important to consider all of your options before making any decisions. Consolidating your old pensions into one could help you cut down on management fees and give you a better picture of how your finances are looking. But before transferring your pensions it is essential to obtain professional financial advice.

Wealth vs health

More than half ignore medical advice and work despite poor health due to financial worries.

When you are off work due to an illness or injury, worries about how you are going to pay your bills can make an already stressful situation worse. So much so, that many people are finding themselves in the very difficult position of having to put the need to earn money over their health by continuing to go to work, even when advised not to by a doctor.

Worse still, financial concerns mean some are avoiding seeing their GP altogether, even when concerned they may have a serious illness. Money worries see six in ten people go to work when they are ill, with one in three ignoring their doctor’s advice due to financial concerns, even when they are worried about serious illness, according to a new research[1].

No financial protection in place

Three in ten people have no financial protection if they were off work should they fall ill or become injured, while 27% could financially only last for a month. The findings highlight that sick and injured Britons are forcing themselves back into work, despite doctors’ advice, due to having no financial protection in place.

Nearly a third (32%) admitted to not following their doctor’s advice because they couldn’t afford to take time off, while 43% would put off going to the doctors due to financial concerns – even if concerned they may have a serious illness.

Negative impact on mental wellbeing

The research also highlights that while nearly half (49%) say they would benefit from a policy that would cover their income if off work for an extended period, just 27% actually have any income protection cover in place, with 32% unaware of what such a policy is.

Money worries can have a negative impact on people’s mental wellbeing, with nearly two-thirds (64%) of those surveyed saying they fret about how they would cope financially if they needed to take four weeks or more off work due to poor health.

Sick and on a reduced income

Three in ten (30%) surveyed have nothing in place to support them financially should they be ill or injured, while 29% would rely on Statutory Sick Pay, which at £99.35 per week for up to 28 weeks (tax year 2022/23), pays much less than many people need to cover the cost of living, which continues to rise.

If on long term sick and on a reduced income, many would use their existing savings (45%), make reduced payments (33%), or borrow money from family or friends (25%) or use a credit card or loan (15%). However, during the pandemic a third (34%) of people had already dipped into their savings, meaning they may now have less to fall back on.

Longer-term financial impacts

As a result of this situation, more than half (55%) admit they could only survive for three months, while more than a quarter (27%) would struggle after just one month. The additional financial pressures of being off sick for four weeks of more could push people to prioritise their household expenditures. The top five things’ people surveyed prioritise include utilities (67%), mortgage/rent (65%), food (56%), insurance i.e. (car/home/pet (15%) and internet/broadband (13%).

As well as the immediate impact of long-term sickness, many people are also concerned about the longer-term financial impacts, with almost half (49%) of those surveyed saying they worry about the impact on their ability to get credit in future. This is particularly an issue for the self-employed, where 43% worry about losing customers and just over a third (36%) worry that their business would have to fold.

Source data:

[1] Survey conducted by Censuswide for Nationwide between 10-14 February of 2,003 people who are self-employed or employed but receive Statutory Sick Pay when off work through illness or injury.

Fed up with your nine-to-five?

Sixty the most popular age to retire early.

There are many factors that can influence when someone decides to retire. For some, it may be based on health reasons, while others may want to take advantage of government benefits or simply enjoy a more relaxed lifestyle. However, one of the most common factors that determines when people choose to retire is their age.

So, what is the most popular age to retire early? Sixty is the most popular age to retire early, according to new research[1] which reveals the key steps people have taken to embrace early retirement and examines the costs and benefits of doing so.

Wanting to enjoy more freedom

One in four (25%) are planning to celebrate their 60th birthday by leaving work behind. With the State Pension age currently standing at 66, the findings show one in six (17%) people who have taken early retirement did so when they were 60, making it the most common age to make an early exit from working life.

This is also the most popular target age for people who intend to retire early in the years ahead, with one in four (25%) planning to celebrate their 60th birthday by leaving work behind. The desire to retire early is primarily driven by ‘wanting to enjoy more freedom while still being physically fit and well enough to enjoy it.’

Embracing a new lifestyle

Nearly one in three people (32%) who have retired early or plan to do so gave this reason for embracing a new lifestyle. Financial security is the second most common factor prompting people to embrace retirement. More than one in four (26%) early retirees say their decision was a result of ‘being in a financially stable position’ so they can afford not to work.

The influence of money matters is also visible in people’s choice of early retirement age. One in five (20%) people targeting early retirement have set their sights on 55 to make the transition from working life. This is likely to be influenced by their ability to access their pension savings from this age.

‘Too taxing and stressful’

Other key factors encouraging people to seek early retirement include reassessing their priorities and what’s important to them in life (23%), wishing to spend more time with family (20%) or finding they are either ‘tired and bored’ of working (19%) or find it ‘too taxing and stressful’ (19%).

The research suggests the impacts of early retirement are wide-ranging and broadly positive in many areas of life. Most notably, more than two in three (68%) people who have retired early say their happiness improved as a result. In terms of the world around them, 44% of early retirees say their family relationships improved and 34% reported improvements in their friendships.

Retirees boost to mental wellbeing

When it comes to their health and wellbeing, more than half report that early retirement has delivered a boost to their mental wellbeing (57%) and half (50%) say their physical wellbeing improved.

However, the findings suggest these benefits come at a cost, with nearly half of early retirees finding their finances worsening as a result (47%).

Women are the most likely to have felt a negative financial impact from retiring early (50% vs. 44% of men). Across both genders, only 22% feel they have benefitted financially from their decision to retire early.

Stepping stone to retiring early

Among those people who have retired early, one in three (32%) identify having a defined benefit (final salary) pension among the main measures that enabled them to take retirement into their own hands. This suggests the concept of early retirement may get harder for younger generations to achieve, with the majority of the private sector workforce now saving into defined contribution pension schemes.

However, the findings suggest that people can still take positive steps to make an early retirement possible. Paying off your mortgage (30%) is identified as the second most common stepping stone to retiring early, while almost three in ten early retirees (29%) say saving little and often was one of their main strategies. Nearly one in five (19%) say they also saved extra whenever they received a pay rise or a bonus during their working life.

The main measures enabling people to retire early or think about retiring early

32% – Having a defined benefit (final salary) pension
30% – Paying off one’s mortgage
29% – Saving little and often
19% – Saving extra whenever receiving
a pay rise or bonus
16% – Receiving a redundancy payout
14% – Receiving an inheritance

Wanting a new sense of purpose

Among those who take early retirement, the research also reveals there is a small contingent who have returned to work (17%) or envisage themselves doing so in the future (15%). Over one in four (27%) cite the reason for returning to work is because they ‘wanted a new sense of purpose’, making this the most frequent driver, followed by ‘missing the company and social interactions with colleagues’ (26%). However, a similar number (24%) of early retirees find themselves heading back to work having experienced financial issues.

While happiness soars in retirement, many people find their finances take the strain when they retire early and money worries are one of the biggest factors resulting in people returning to work. If you aspire to retire early, it’s vital you plan your finances to be sustainable for the long-term.

Source data:
[1] https://www.aviva.com/newsroom/news-releases/2021/12/sixty-the-most-popular-age-to-retire-early/

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS PLAN HAS A PROTECTED PENSION AGE). THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION WHICH ARE SUBJECT TO CHANGE IN THE FUTURE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT.

Scammers ‘socially engineer’ victims

17% increase in suspicious or scam-related activity.

Any of us can fall victim to a scam. Scams are increasingly common and many people are caught out. They can be very distressing, and the impact is often emotional as well as financial. If you’ve been the victim of a scam, remember that you’re not alone.

Increasingly, scammers are relying on our psychological biases to trick us into handing over important data, financial information and our money. There are a growing number of scams that are harder to identify, with scammers using increasingly complex psychological tactics to ‘socially engineer’ their victims into handing over personal data or money.

Would-be investors are vulnerable to manipulation from scammers when put under time pressure, promised greater returns on investments or contacted by what they think is an authority figure. Research highlights the psychological tricks that scammers use, as data shows a 17% rise in reported scams[1]. The data highlights that almost three-quarters of Britons have seen an increase in suspicious activity and of those who were scammed nearly four in ten (39%) didn’t report it.

Criminals carrying out scams usually apply pressure tactics, illusions of scarcity or pretending to be a trusted authority to ‘socially engineer’ their victims. The findings come as consumer polling shows that seven in ten Britons claim to have seen an increase in suspicious or scam-related activity, but almost a third of respondents (31%) admit they wouldn’t know what to do if they found themselves in that position.

Purchase scams

Purchase scams, where people buy goods online which don’t exist or never arrive, accounted for over half (53%) of reported scams – with an average value of £980.

Scammers create a perceived scarcity and therefore ‘value’ in what they are selling to motivate consumers to act quickly and not rely on their better judgment. This might be advertising something as a ‘one-time offer’, a limited edition price or availability, or rushing us into buying something that ‘has’ to be bought now – even if you’ve never seen the product in real life.

You should never be rushed; it’s always important to take the time to check before proceeding with a purchase. If it’s a big-ticket item like a car, unless you’re buying directly through a well-known brand, it’s good practice to see it in person before spending any money.

Impersonation scams

Over two-thirds of Britons (64%) would be more likely to comply with a request if they believed it was coming from an institution they knew, such as their bank, the police or even the NHS.

It’s not surprising, therefore, that scammers exploit this insight. In these situations, scammers will harness that sense of authority to instil fear in their victims – perhaps suggesting their bank account has been compromised, a payment is overdue or that they will be fined if they do not pay the full amount. Psychologically, many of us will take these at face-value if they’re coming from what we believe to be a reputable institution.

Real phone calls from a bank will never ask customers to do things like share their PIN/security information or to transfer money to a ‘safe account’.

Investment scams

Investment scams often account for the highest average value type of scam, which is why they’re such enticing options for fraudsters – with £15,788 lost on average to these types of scams in the last quarter.

Investing should generally be a very measured activity and people who are looking to invest their money will often do a lot of research before making their decision, or at least ask for a second opinion. However, scammers are experts at exploiting the fact that people want to grow their assets, and that we can sometimes put our better judgement aside for a high return opportunity.

Worryingly, this is reflected in the research, with three in ten (32%) admitting they would be willing to go with an investment or savings provider they’d never heard of if they thought the returns would be higher than those of their existing provider. A further fifth (21%) stated they were unsure, indicating they could potentially be convinced.

Check the Financial Conduct Authority (FCA) website and its warning list (https://www.fca.org.uk/scamsmart/warning-list) for cloned companies to make sure you’re dealing with a genuine company. If you have any suspicions, talk to someone you trust and don’t ignore your concerns. It’s important to ask questions and make sure you feel comfortable in the choices you are making – and remember, if the returns seem too good to be true, they probably are.

Source data:
[1] Barclays data on reported scams from October 2021 – December 2021. Mortar Research study of 2,002 participants, January 2022.

Future wealth

The average British child is worth just under £5,000 by the time they reach school.

When we talk about the Bank of Mum and Dad, we are effectively talking about handing money over to your children. There are many reasons why your descendants might look to you for financial support, and many routes you could take in funding them, if you so choose.

All children, regardless of means, benefit from learning simple concepts like saving to attain goals and operating within a budget. That can start with pocket money for non-essentials and mature into allowing teenage children to manage their own clothing budget or take control of a portion of the family’s charitable donations. You may even want to allow older teens to allocate and manage a small portfolio for exposure to investments.

Children’s key life moments

A nationwide survey[1] of parents has revealed the wealth that average British children have accumulated by the time they reach adulthood, with the average UK child having amassed just under £5,000 by the time they reach school at the age of five, just over £10,000 by the age of 18 and £12,000 by the time of their 21st birthday.

The majority of UK parents surveyed said they began saving for their children’s key life moments when they were five years old, with 27% saying they started before their child reached their first birthday and 15% even admitting they began before their child was even conceived!

Making their own money

The findings revealed that £125 a month was the average amount that parents put aside for their child’s future each month. 39% of those who responded said they feel it is the duty of every parent to save for their children, whilst 55% believe it is their duty but admit they can struggle with the obligation.

One in 20 (6%) insist their children should make their own money and their own way in life, without assistance from their parents.

Best possible start in life

Everyone wants to do right by their child but we appreciate it’s not always easy. Instead of large presents on birthdays or at Christmas, consider using part of the budget to save for their future.

The majority of parents want to give their child the best possible start in life, but what are the best ways to invest for children? Some ways of passing money on to your children can start very early, including putting money into a Junior Individual Savings Account (JISA) for your child.

Helping the younger generation

The current annual allowance for contributions is £9,000 (tax year 2022/23), meaning that if you start paying into an JISA when your child is young, they could find themselves with a sizeable sum of money by the age of 18.

Focusing on later life stages, some parents might also consider contributing to their children’s pension pots. Covering school fees and other expenses for grandchildren is another possible way to help out younger generations financially. But with house prices at historically high levels, the most common ‘Bank of Mum and Dad’ queries we receive concern helping the younger generation onto the property ladder.

THE VALUE OF INVESTMENTS CAN FALL AS WELL AS RISE AND YOU COULD GET BACK LESS THAN YOU INVEST. IF YOU’RE NOT SURE ABOUT INVESTING, SEEK PROFESSIONAL ADVICE.

Source data:
[1] The research of 1,500 parents with dependents currently living at home with their parents, was commissioned by Perspectus Global in March 2021 on behalf of Brewin Dolphin.

Gender Pension Gap widens

Women have lower pension pot sizes in every age bracket.

The staggering impact of the gender pension gap has been revealed in new research[1] which shows that women have lower pension pot sizes in every age bracket, with the situation significantly deteriorating as they approach retirement. Worryingly, women on average retire with less than half the income of men.

Gender pension gap by pension contributions: age gap in pension contributions

20-24 13%
25-29 16%
30-34 15%
35-39 18%
40-44 23%
45-49 29%
50-54 35%
55-59 40%
60-64 45%
65-69 49%

Reduction in contributions paid into pensions

The amount paid in contributions has a big impact on what is received at retirement and the difference between men’s and women’s contribution rates is stark. For most people, the effect of working part-time means a reduction in contributions paid into their pension.

If a person opts to reduce their full-time working hours to three days a week, they might expect their pay and their pension contributions to reduce by 40%. However, because of auto-enrolment (AE) thresholds, the impact could be greater than that.

Good financial planning

A person earning £30,000 opting to reduce their hours by 40% would see their pay reduce by 40%. However, because of the lower qualifying earnings threshold (LET) under AE, their pension contributions would reduce to around 50% of their full-time value. A worker earning £20,000 would see their pension contributions reduce by over 58%.

Pension contributions are unlikely to be a deciding factor when considering whether to work part-time. What is important is that people understand the long-term impact on their pension when they are making that decision. This is crucial to good financial planning.

Upping pension contributions

Some people might consider upping their pension contributions, but this would have to be carefully balanced against disposable income. Another option some parents may consider is sharing the caring responsibilities to help spread the long-term financial impact.

One significant change to help women in this position would be to remove the LET. It has the potential for the biggest impact on closing the gender pension gap and has been promised by government for the ‘mid-2020s’.

How to help close the gender pension gap

If you are working part-time and are automatically enrolled into a workplace pension scheme, consider increasing your monthly contributions, if it is affordable.

If you earn less than £10,000 per year, speak to your employer about your options for joining your company pension scheme.

If you are thinking about reducing your working hours to help balance family life, you might want to consider whether it is better for you or your partner to work part-time. As part of those considerations, you might want to look at which of you gets higher employer pension contributions.

When it comes to saving into a pension, starting early allows a small contribution to build up over time.

For those in a long-term relationship, have a stake in your finances. Should divorce ever come into the picture, keep pensions at the forefront of your mind when splitting assets.

Check your National Insurance record to see if you will get the full State Pension amount when you retire. You need a total of 35 years of National Insurance contributions, or, in some cases, you can apply for credits. If it looks like you might be short, you might have the option to pay to fill in the gaps.

Apply for Child Benefit even if your overall household income means you need to pay it back through a high-income Child Benefit charge. If you are not working while looking after a child you get State Pension credits automatically until your youngest child is 12 years old as long as you are claiming Child Benefit. If you do not claim Child Benefit you do not receive the credits.

Talk to your employer about the policies they offer.

Source data:
[1] Aviva Workplace Pension Data: Percentage difference in mean total contributions paid in January 2022, men versus women, by age group, based on a sample of 2,073,000 workplace pension plans receiving contributions in the month.

More Britons insure their homes than their lives

Ensure your financial security for when you might need it most.

There are a number of reasons why you might need life cover and critical illness cover. If you have dependents, then it is important to make sure that they will be financially secure if something happens to you. If you have a mortgage or other debts, then life cover can help to pay these off.

Critical illness cover can provide you with a lump sum of money if you are diagnosed with a specified serious illness, which can help to cover the cost of treatment and make sure that you and your family are financially secure.

Not so keen to insure our own lives

But, according to new research[1], only 32% of people in the UK have life insurance compared to 64% who have taken out an insurance policy to cover their homes. Showing that there is still some truth in the old adage ‘An Englishman’s home is his castle’, it would seem some people place more importance on insuring their homes than their lives.

The figures reveal that whilst we’re happy to protect our latest iPhone purchase (14%), our upcoming holiday from the unpredictability of COVID (21%) and our furry four-legged friends (19%), we’re not so keen to insure our own lives to protect our loved ones.

Reluctant to think about our own mortality

Indeed, 66% of people aged over 35 do not have life insurance cover, and a further 84% do not have critical illness cover. Whilst 58% of people with pet insurance and 47% with mobile phone insurance have not taken out life insurance.

It is not unusual for people to be reluctant to think about their own mortality, especially younger people in their 30s and 40s. However, it is important for people during the accumulation phase of their lives, which is generally those under 50, to think about protecting their financial journey.

Transfer risk to an insurance provider

Taking out life insurance and critical illness cover can help to transfer risk to an insurance provider. It is a way to help protect the journey towards meeting your financial goals.

Almost a fifth of the respondents (19%) who have life insurance in place said they do not have, or they are not confident that they have, sufficient life insurance to pay off their debts and provide for their dependents should the worst happen.

Protect your family or other loved ones

Less than half (45%) of those polled say their existing life insurance policy will cover their mortgage and only a quarter (24%) say it would cover their current salary. A further 15% say it will only cover the basic cost of living for their dependents, 4% realised that their current policy covers a previous salary which is lower than their current earnings, and 20% admit they simply don’t know how much their life insurance would cover.

Whether it’s to protect your family or other loved ones, it is important to take professional advice and make a plan, which can be reviewed regularly, to ensure that the people that matter to you are taken care of and that your financial goals can be achieved.

Source data:
[1] The research of 1,000 nationally representative UK adults was commissioned by Find Out Now in November 2021 on behalf of Brewin Dolphin.

Passing on wealth to the next generation

30 million parents want to leave wealth in their Will.

Research[1] has highlighted how millions of Britons say they want to plan to pass on wealth to their children and grandchildren in a Will – but fewer than half have written one. Failing to plan write a Will or complete estate planning could potentially lead to a significant Inheritance Tax (commonly called IHT for short) bill being levied on a person’s estate when they die.

Anything that isn’t exempt will be taxed

IHT is a tax that may be paid on your estate (your money, possessions and your share of any property) when you die, reducing how much value will ultimately pass to your beneficiaries. The starting point for IHT in the current 2022/23 tax year is £325,000. When the value of an estate exceeds this amount, anything that isn’t exempt will be taxed at 40%.

The tax year runs from 6 April to the following 5 April. So, the tax year 2022/23 started on 6 April 2022 and finishes on 5 April 2023.

Rising number of people could unexpectedly face IHT bills

Recent rises in houses prices mean the estates of a rising number of people could unexpectedly face IHT bills. The research found that 30 million (88%) people with children say they plan to leave money to their children and/or grandchildren in their Will but only 41% have written one. Twenty million (59%) parents do not currently have a Will.

Although over half (57%) of people with children are considering seeking professional financial advice about the best way to pass on wealth, only 13% have done so. More than half (56%) of people with children say they are considering writing wealth into trust but only 12% have actually done so.

How parents plan to pass on wealth

Leaving it in a Will 88%
Bank transfer/cash 67%
Consulting financial adviser 57%
Writing wealth into trust 56%
Putting money into investment 53%
Putting money into a pension for their children 43%

Minimising the amount of IHT you could be liable for

The research identified that mass affluent consumers – those with assets of between £100,000 and £500,000 excluding property – are more likely to have their affairs in place to pass on an inheritance. More than half (51%) of mass affluent parents have a Will in place. 20% of mass affluent parents have put money into an investment for their children or grandchildren (compared to 12% of all parents).

17% of mass affluent parents have obtained professional financial advice to discuss the best way to pass on wealth. And 13% of mass affluent parents have written wealth into trust for their children. The average amount written into a trust was £184,000 while more than one in five (21%) wrote more than £250,000 into a trust.

Source data:
[1] LV= surveyed 4,000 nationally representative UK adults (of which at least 500 were mass affluent) via an online omnibus conducted by Opinium in December 2021.
TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.

Millions of midlifers are propping up their families

Impact on work, wealth and wellbeing putting further pressure on age group.

The financial decisions made by individuals as they reach retirement could have significant consequences on their finances and standards of living. Midlifers (people aged 40 to 60) are facing a challenging backdrop, with rising inflation and increasing energy bills putting further pressure on an age group that is already juggling multiple headwinds.

Midlifers spend £10 billion a year in financial help for loved ones, while support costs have risen by £300 annually over the last 15 years. According to new analysis[1], responsibility peaks at the age of 45, with midlifers having the greatest level of financial responsibility at this stage of their life.

Greater pressure

Unpaid caring responsibility also becomes more common from the age of 58, meaning many 40-60-year-olds are struggling to juggle their responsibilities.

Many midlifers already feel the level of support they provide is unsustainable (10%). With inflation set to continue to rise throughout 2022, energy prices reaching record highs and an increase to National Insurance, this support will be under even greater pressure[2].

Financial support

The study examined the unique challenges faced by those in midlife and the impact of these on people’s work, wealth and wellbeing. It finds that millions of midlifers are propping up their families, with more than six million people aged 40 to 60 (33%) currently providing financial support or unpaid care to at least one loved one, on top of their job and other family commitments.

More than one in six (17%) people in midlife provide financial support to an adult in their life, such as an elderly parent or grown-up child, at a collective cost of £10.4 billion a year. Those supporting adult children will spend an average of £247 a month, whereas midlifers who provide financial support to an elderly parent or relative will spend an average of £282 a month, in addition to their own household expenses.

Time pressures

Alongside financial support, those aged 40 to 60 are also relied on to provide unpaid care (15%) to elderly relatives or childcare for grandchildren while also juggling their lives and careers. The average amount of time taken up by unpaid care is the equivalent to a part-time job, at nearly 15 hours a week.

As a result of these time pressures, one in four people in midlife (25%) get less than an hour to themselves in the average day and one in five (19%) spend no time on their financial wellbeing.

Midlife spending

The financial and caring commitments required of people in midlife have already increased in recent years. Based on analysis of ONS data, spending in areas that includes support for other generations has increased by £300 in the last 15 years, placing further pressure on this age group[3].

The COVID-19 pandemic has increased this further, with those in midlife spending more time and money supporting their loved ones. Just over half (52%) of 40-60-year-olds in the UK have seen their financial pressures grow, while 34% say that it has increased the time pressure they face.

Source data:
[1] Opinium survey of 4,009 UK adults aged between 40 and 60 years old in the UK was conducted between 28 December and 6 January 2021
[2] Rising cost of living in the UK, House of Commons library
[3] Opinium analysed data from the ONS to look at the most relevant spending amongst households where the household reference person is closest to our midlife cohort (in this case 50-64). The trends from the ONS Family Spending series indicates that spending on areas such as health and education, which are some of the main areas of spend for those providing care or financial support, is approximately £300 higher than it was for households where the household reference person is a midlifer compared to 15 years ago.

How to cope with the rising cost of living

Nine in ten adults make stark spending decisions as anxiety runs high.

The pressure of spiralling living costs is a major concern among many UK households, with the vast majority looking to make significant lifestyle changes in response to price rises.

According to new research[1], 95% of adults in the UK say they are worried about the anticipated rise in the cost of living in 2022. Women are the most worried, with a third (33%) mentioning they are extremely worried compared to a fifth (22%) of men.

Cost of living increases

The expense most UK households are concerned about is the rise in energy bills (92%), with three in ten (29%) being extremely worried about this, followed by food shopping (87%). Cost hikes to phone and internet contracts, which typically increase by the more than the Consumer Price Index (CPI) rate, concerns 84% of UK adults.

The level and speed of price rises means nine out of ten of us (89%) are looking to make changes to pay for the cost of living increases. Worryingly, the option for a fifth (21%) of people is to borrow their way out of trouble, with 7% admitting they simply don’t know how they’ll cover increases and 5% of workers saying they are considering taking out a short-term (payday) loan.

Cut back on costs

Two-thirds (66%) of people say they will change their food shopping habits, with half of these saying they’ll reduce the amount of food they buy. Other solutions to cut back on costs include reaching for the thermostat and reducing the length of time the central heating is on (46%), turning off the heating in unoccupied rooms (36%) and nearly a fifth (17%) taking the drastic action of turning the heating off altogether. As part of the cutting-back regime, half (48%) of fulltime workers feel they’ll be forced to reduce or stop saving altogether.

On top of rising costs, National Insurance contribution rates increased from April, just as energy bills rise more steeply, which will dramatically affect take-home pay. For an individual on a salary of £50,000, that will mean an extra deduction of £464 a year, or £214 for someone earning £30,000. Worryingly, a fifth of workers (20%) say they are not aware of these changes, and two-fifths (43%) say whilst they are aware, they are not prepared for the changes to start.

Anxious about finances

Just as families in the UK felt they’d seen the worst of the financial impact of COVID, they’re facing a dramatic rise in their household bills. People are having to make difficult choices in an attempt to reduce the impact of rising energy bills, higher inflation, tax hikes and potential interest rate increases. Understandably, this has made many people anxious about their finances, but it’s also testing their financial resilience.

Household bills are rising steeply, with the cost of filling up the car at the pumps having reached eye-watering levels, leaving families up and down the country worried about their ability to make ends meet. Concern is so widespread that families who, on the face of it, would be considered financially comfortable and even those with six-figure incomes are deeply worried.

10 ways to help manage your finances:

1. Save money on your energy bills

If you’re finding it hard to pay your energy bills, contact your provider as they should help you with ways to pay and don’t be afraid to ask for help from a debt advice charity if you’re struggling.

Switching your energy supplier used to be a good way of saving money on your household bills, but with energy prices soaring, you’re probably better off staying on the standard tariff with your existing supplier once your fixed tariff comes to an end. Some suppliers aren’t taking on new customers, and that way you’re protected by the energy price cap. The government-backed website – Simple Energy Advice – has tips on how to keep your energy bills down.

2. Save money on petrol

Try using a fuel price checker site to check that you’re always getting your fuel for the cheapest price possible. Other ways to save include: driving at a lower speed and avoiding accelerating and braking quickly if you can; making sure your tyres are at the right pressure; and taking out anything heavy in the car that you don’t need to carry.

3. Food bills

Grocery bills can make up a big proportion of your household spending so it makes sense to look for savings. Plan your meals for a week and then write your shopping list – this will help you avoid buying unnecessary items. Consider changing to a cheaper supermarket or to different brands if you prefer a particular supermarket.

4. Water bills

You can’t switch water suppliers but there are steps you can take to keep your bills down. Check if you’d save money by switching to a water meter. You can use the Consumer Council for Water’s calculator. If you’re on certain benefits and have a large family or someone with a particular medical condition, you may qualify for the WaterSure scheme, which caps water bills. Meanwhile, if you’re on a low income or receiving benefits, check what additional assistance your water company offers.

5. Council Tax

Depending on your circumstances and who is living with you, you may qualify for a Council Tax discount. For example, you can get a 25% discount if you’re the only adult living in the property. Find out what discounts are offered by your local council at GOV.UK.

If you’re on a low income or certain benefits you may be able to get a Council Tax Reduction. Your bill could be reduced by up to 100%. There’s a different scheme in Northern Ireland.

6. Check if you’re entitled to state benefits

Billions of pounds of state benefits go unclaimed each year, and you could be missing out. The national charity Turn2us has a free and confidential benefits calculator on its website (https://benefits-calculator.turn2us.org.uk/), which can help you work out which means-tested benefits you’re entitled to. It also has a grant search tool (https://grants-search.turn2us.org.uk/) for information on grants you may be able to apply for.

7. Find out where your money’s going

Start by finding out where your money’s being spent. It sounds obvious, but we may not realise exactly how much we’re spending each month – and what we’re spending it on – until it’s laid out in front of us.

Review your last three bank statements and credit card bills (or check online) and spend some time going through them, highlighting any areas where you think you’re spending money unnecessarily or spending too much. This could be on anything from a top of the range broadband package that you don’t need, to a mobile phone contract where you’re paying for data you don’t use.

Every month money is wasted on unused subscriptions, with the most common wasted money on gym memberships. A fifth (19%) of UK adults said they planned on cancelling TV subscriptions (e.g. Netflix, Amazon Prime). Even magazine subscriptions of a few pounds a month are money down the drain if you don’t have time to read the magazine. Take a few minutes and cancel any subscriptions you don’t really use to save yourself a bit of cash.

8. Draw up a budget

Drawing up a weekly or monthly budget will help you get your finances under control. It’s just a list of money you have coming in and what you spend and it doesn’t have to take long to set up. There are plenty of templates online to get you started. Alternatively, budgeting apps can also be used to plan what you want to spend and keep track of it.

9. See if you can pay less interest

If you owe money on an expensive credit card, it may be worth considering whether you can transfer the balance to a credit card charging 0% interest. Although these cards are interest free, you will normally be charged a balance transfer fee of between 1 and 3% of the amount you transfer. Because you won’t be charged interest on your balance, more of your money can go to repay what you owe.

These cards aren’t right for everyone, and it’s important to make sure you can pay off your balance by the time the 0% interest deal runs out. It may also affect your credit score, especially if you do it multiple times.

10. Get help with unmanageable debts

If you are struggling to pay for the essentials, you are using one credit card to pay off another or your debts are causing you worry, then contact a debt advice charity, such as StepChange. They will be able to give you help with your debts, free of charge.

Source data:
[1] Royal London commissioned a survey by Opinium between 25 February and 1 March 2022 with a sample of 4,001 nationally representative UK adults.