As the nation looks to the year ahead, new research1 from St. James’s Place (SJP) shows how the power of a financial plan and simple financial actions can help people retain long term confidence in their financial health. While the current economic backdrop has caused the average UK household wealth to drop significantly - by £35,000 - in the last year, the majority of those with a plan in place remain confident and comfortable in their financial position.
SJP’s Financial Health research, conducted annually among adults across the UK, reveals that over the last 12 months the cost-of-living crisis has seen British household wealth drop 23%, from £147,762 to £113,154, with London (53% drop), Scotland (50% drop) and Wales (13% drop) taking the biggest hit to overall household wealth. Across the UK, people say they are taking a series of measures to cope with this fall in wealth, such as shopping at cheaper supermarkets (41%), not buying clothes they consider non-essential (40%) and switching utility providers (20%). Additionally, one in three (30%) are putting less money into savings, or stopping saving altogether, because of the economic climate.
The power of a plan
Against this backdrop, the SJP research highlights how having a plan in place can help people better navigate tough periods in the short term and also build greater financial health over the longer term. Across the nation, four in ten (41%) have a financial plan2, and, perhaps surprisingly, with those aged under 34 more than twice as likely to have one (61%) than those over 55 (27%). Three quarters (76%) of those with a plan remain confident in their financial position, while over half (54%) describe their current financial position as comfortable, compared to 34% who don’t have a plan. Additionally, two-thirds (65%) of those with a financial plan have seen their total wealth increase in the last decade - almost double the amount of those without a plan (38%).
The majority (67%) of those with a financial plan in place have taken financial advice. Whilst the cost-of-living crisis has impacted most income groups over the past year, with 31% of those with a household income of over £50k or more describing their financial position as ‘struggling’, those who receive advice in this group have seen their wealth grow on average from £496,971 in 2022 to £516,599 in 2023, an increase of 4%.
Simple financial actions to build confidence and resilience in 2024
While economic conditions in 2024 are expected to remain difficult, there are many simple actions that everyone can take to build greater financial confidence and resilience, even when times are testing. SJP’s research found that 25% have not reviewed their outgoings in the last six months, while three in ten (31%) also haven’t recently checked if they can get a better rate on their savings, or a better deal on their household bills such as their broadband, gas or electricity (also 31%). One in five admit they’ve never reviewed what they’re putting into their pension (19%) or checked if they’re making the most of their tax-free allowances (18%).
However, these actions can make a difference, with those who have taken these steps in the last two years reporting an improvement in their finances. More than half (57%) who checked for better savings rates saw a positive impact, as did 50% of those who looked if they could make savings on household bills. Similarly significant numbers of those who reviewed their outgoings (47%), reviewed their investments (41%), checked they’re claiming all the childcare vouchers they’re entitled to (40%) and they’re making the most of tax reliefs (39%) all said their finances improved as a result.
Alexandra Loydon, Director of Engagement and Consultancy at St. James’s Place, says: “The economic circumstances in the last 12 months have hit households, with average UK wealth suffering a sharp fall. This not only impacts everyday finances, but also long-term savings, with a substantial number of people now putting away less money for their future. Unfortunately, conditions are expected to remain challenging in 2024 which is worrying given the effect that the last year has already had on people’s finances.
“When many factors are out of our control, it’s even more important to take control of the things we can have an impact on. Having a plan in place, and if possible seeking advice, can help you grasp your financial situation and take action to improve it, both for the short and long term. Simple, regular actions such as reviewing outgoings to see if you can cut any costs, reviewing savings to check you’re maximising the best rates on offer, and ensuring you’re utilising tax allowances and reliefs can all make a real difference now and in future. Knowing that you’re on top of these things will also give you peace of mind in unsettling periods.”
Notes to Editors
1 - Research conducted for St. James’s Place by Opinium, among 6,000 UK adults between 16th – 25th October 2023. Research from last year was conducted by Opinium, among 4,000 UK adults between 17th – 21st October 2022. All results are weighted to nationally representative criteria.
2 - A financial plan could include an active plan to increase savings and/or pension, or buy a property over the long-term, with an ambition and ability to act on the plan in the next 5 or so years.