• Women hit hardest – as a quarter (25%) report their wealth has fallen compared to 19% of men
  • A third (35%) don’t feel financially resilient and 22% admit they’re struggling – significantly more than last year
  • Women more likely to make cutbacks and savings, while men focus efforts on growing wealth through seeking higher interest and increasing risk
  • SJP’s UK Financial Health mid-year Report reveals the impact the last year of hardship has had on finances

As the cost-of-living crisis deepens, with inflation hitting 9.4% today, the impact on household finances has been heavy. New insights1 from St. James’s Place (SJP) find that one in five (22%) UK adults report their total household wealth has decreased over the past year.

SJP’s Financial Health Research Report, part of an ongoing deep dive into the UK’s financial condition and people’s individual responses to it, reveals the devastating impact recent months have had on people’s financial situations – with women being hit hardest. As many as a quarter (25%) of women have found their household wealth has fallen in this past year, compared to just 19% of men.

Given this backdrop, a growing number feel less financially comfortable and resilient than they did last year. Over a fifth (22%) describe their current financial position as struggling, compared to 14% in October 2021, while more than a third (35%) do not feel financially resilient, compared to 29% previously. Again, women feel in a worse financial position than men, with 26% saying they are struggling (vs. 18% of men) and 38% not feeling financially resilient (vs. 32% among men).

Knock-on effect on future finances

Many people have had to take action to cope with a more precarious financial situation – which could have an impact on their future finances. One in six (17%) have been forced to use their savings before they had planned (rising to 19% of women), while 16% have stopped putting money into savings (20% of women).

Growing wealth: women make cutbacks while men make more of money they’ve got

SJP’s research also suggests that, among those whose wealth has increased in the last year, women have focussed on making cutbacks and changes to their lifestyle, while men have made direct changes to their finances to try and grow their wealth.

Almost half (45%) of women that have seen their wealth increase in the last year made an effort to reduce their monthly spend on goods and services – compared to 34% of men that did the same. Men focused on:

  • Proactively seeking better interest paying investments (21% vs. 17% of women)
  • Increasing risk appetite on investments (12% vs. 8% of women)
  • Switching providers for household services (25% vs. 19% of women)

Alexandra Loydon, Director of Engagement and Consultancy at St. James’s Place, says: “The last few months have taken their toll on many people’s finances, as inflation has hit record levels and the cost of living has soared. Understandably, a lot of people now feel they are struggling financially and have had to take action to cope, including dipping into savings earlier than planned.

“Our research shows women tend to be more concerned about the rising cost of living and the financial impact this is having. This is likely driven by the fact women tend to earn less than men2, resulting in less disposable income and ability to save, which also contributes to smaller retirement pots3. It’s positive to see that some men and women are proactively looking at ways to grow their wealth even in this difficult period. Unfortunately, the cost-of-living crisis is going to reach more and more people as the year goes on, especially when energy bills rise again in Autumn and Christmas costs come in. Where possible, we would encourage households to both look at their spending and see if any cutbacks can be made, and also consider maximising current wealth by seeking the best interest paying accounts or increasing risk appetite if appropriate.”

Lack of planning for the future

The research also shows that consumers are taking more of a short-term view when it comes to their finances, with 71% admitting they do not have a financial plan in place for the future – increasing from 62% last year. Just 29% say they do have a plan in place. Furthermore, in the past year, just over a fifth (22%) have received professional financial advice, while 75% have not.

Alexandra Loydon continues: “During difficult periods, having a plan to take control of your financial situation can be really beneficial both for the short and long term. For example, putting in place monthly budgets to understand where your money is going, or asking yourself whether you really need to make purchases will help keep everyday spending in check. Meanwhile, reviewing your financial goals will help you avoid making any rash decisions during these uncertain times.”

Alexandra Loydon shares financial tips and considerations during the cost of living crisis:

  1. Save it don’t spend it – “Saving can feel like a challenge when the cost of daily expenses is at an all-time high, but instead of thinking of it like you’re cutting back even further, consider that you’re giving money to your future self. It’s worth reviewing monthly bank statements and taking a ruthless look at where your outgoings are going, to see if you really need all monthly subscriptions and memberships. For example, it might be possible to freeze a gym membership while the weather is nicer and outdoor exercising is an option. These small shifts in spending to saving don’t have to be forever and can make a difference to your financial wellbeing over time.”
  2. Direct any surplus capital to the things that are really important – “If you are in a position where you have surplus capital, consider where you’re putting this – should this be used to increase your emergency funds or financial protection? Making these decisions when you’re in a position to take action could really help in future.”
  3. There’s power in planning and investing in your future – “Saving for the future in tough times can feel like an afterthought, but it’s never been more important if you want to beat inflation. If you have created a budget to help you save money, you can go on to use this as a tool to help you understand if and how much you can afford to put into your pension – a little is better than nothing at all.”
  4. Take advice – “Being armed with information means you can make the best possible choices for your circumstances as well as bringing peace of mind. This could be in the form of speaking to a financial adviser, using freely available material and services or downloading budgeting and planning apps.”

 

SJP’s Financial Health report can be found in full here.

 

Notes to Editors

This information is for the sole use of journalists and media professionals, and has not been approved by St. James’s Place Financial Promotions. Any calculations shown are for illustration purposes only and are not guaranteed. Actual investment returns may be lower than those illustrated.

1 Research conducted for St. James’s Place by Opinium, among 2,000 UK adults between 17th - 20th May 2022. Comparisons to last year refer to research conducted among 4,000 UK adults between 25th October - 2nd November 2021. All results are weighted to nationally representative criteria.

2 ONS Gender pay gap figures

3 Legal and General Gender Pension Gap figures