Britain in debt: Half of UK adults 'living on financial edge'

A nation of Britons 'living for now' are infact living on the edge when it comes to finances

Approximately nine million more adults are increasingly struggling to manage their money now in comparison to seven years ago, according to a major report into the nation's financial awareness.

More than half (52 per cent) of those surveyed are living on the edge financially, equating to 26 million people across the UK, the Money Advice Service (MAS) found.

This is a sharp increase from 35 per cent of people who were having difficulty maintaining household bill payments when similar research was carried out in 2006.

Nearly a fifth of those surveyed would go out for the evening even if they could not afford it and 17 per cent purchased they were not in a financial position to buy.

The Government-backed body discovered that many people are suffering because of poor financial skills and tighter family budgets following the economic downturn, which has encouraged a "live for now" culture dragging down the nation's ability to save enough for their future.

This has created a "knock-on effect" on people paying into pensions and life insurance, with less than a third doing so. The live for now culture is further exacerbated by lower earnings, as income per hour has dropped by six per cent in real terms since the previous research was undertaken.

Over 5,000 people participated in the latest financial capability survey and more than 70 families were followed for a year by the Financial Capability Of The UK report, which highlighted "a general feeling that people worry about their ability to make it to the next pay day".

It continued: "And because of this, people are focusing more on the here and now than on planning for the future, including for unforeseen emergencies."

The report added that the general picture is of a nation which is working hard to manage.

One in five people surveyed (21 per cent) said they would prefer to have £200 now than £400 in two months' time. Two-fifths also said they would have to consider how they could cover an unexpected £300 bill.

One quarter said they prefer to live for today rather than plan for tomorrow.

The report also uncovered a concerning lack of financial knowledge. One in six adults was unable to identify the correct balance on a bank statement, and one in three did not understand the impact of inflation on their savings. Meanwhile, some 12 per cent of people believed the Bank of England's base rate, which has been at a historic 0.5 per cent low for more than four years, is over 10 per cent.

The MAS was established to raisethe nations understanding and awareness of their finances. It is set to publish a strategy on how people can be helped to improve their finances next year. The Government is also stepping up efforts to give people a better financial grounding. Plans were announced in February for financial education to become compulsory in secondary schools across England.

But the pressure on household finances is encouraging people to be more vigilant. The proportion of people checking their bank statements has increased since 2006 and almost 84 per cent of people said they keep track of their money.

Two-fifths (40 per cent) of people look out for suspicious transactions and 85 per cent said they are putting some money away in savings.

Caroline Rookes, Chief Executive of the MAS, said money management is easy in theory - "spend less than you earn and consider your future" - but becomes difficult to practice in the real world.

Charity Personal Finance Education Group recently warned that young people are entering adult life with dangerous gaps in their understanding of financial matters after one in eight 14 to 25-year-olds said they did not know what an overdraft was.

The previous research in 2006 was carried out by regulator the Financial Services Authority (FSA), which has now been replaced by the Financial Conduct Authority (FCA).

Additional reporting by PA

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: DBA Developer - SQL Server

    £30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Customer Service Administrator

    £13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...

    Recruitment Genius: Dialler Administrator

    £22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...

    Ashdown Group: Contracts Manager - City of London

    £35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...

    Day In a Page

    Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

    US betrayal of old ally brings limited reward

    Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
    VIPs gather for opening of second Suez Canal - but doubts linger over security

    'A gift from Egypt to the rest of the world'

    VIPs gather for opening of second Suez Canal - but is it really needed?
    Art of the state: Pyongyang propaganda posters to be exhibited in China

    Art of the state

    Pyongyang propaganda posters to be exhibited in China
    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
    The male menopause and intimations of mortality

    Aches, pains and an inkling of mortality

    So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
    Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

    Bill Granger's seaside-inspired recipes

    These dishes are so easy to make, our chef is almost embarrassed to call them recipes
    Blairites be warned, this could be the moment Labour turns into Syriza

    Andrew Grice: Inside Westminster

    Blairites be warned, this could be the moment Labour turns into Syriza
    HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

    The mystery of Britain's worst naval disaster is finally solved - 271 years later

    Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
    Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

    'I saw people so injured you couldn't tell if they were dead or alive'

    Nagasaki survivors on why Japan must not abandon its post-war pacifism
    Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

    The voter Obama tried hardest to keep onside

    Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen
    RuPaul interview: The drag star on being inspired by Bowie, never fitting in, and saying the first thing that comes into your head

    RuPaul interview

    The drag star on being inspired by Bowie, never fitting in, and saying the first thing that comes into your head
    Secrets of comedy couples: What's it like when both you and your partner are stand-ups?

    Secrets of comedy couples

    What's it like when both you and your partner are stand-ups?
    Satya Nadella: As Windows 10 is launched can he return Microsoft to its former glory?

    Satya Nadella: The man to clean up for Windows?

    While Microsoft's founders spend their billions, the once-invincible tech company's new boss is trying to save it
    The best swimwear for men: From trunks to shorts, make a splash this summer

    The best swimwear for men

    From trunks to shorts, make a splash this summer
    Mark Hix recipes: Our chef tries his hand at a spot of summer foraging

    Mark Hix goes summer foraging

     A dinner party doesn't have to mean a trip to the supermarket