Households’ financial wellbeing is at its lowest point in two years, as the surging cost of living hits people’s ability to save, according to a Scottish Widows index.
The index, which measures households’ overall perceptions of financial wellbeing, fell to an overall score of 38.5 in the first three months of 2022. Readings above 50 in the index indicate an improvement and those below this mark are a sign of a deterioration.
This latest score is the lowest recorded since early on in the coronavirus pandemic in the second quarter of 2020, when the score was 37.8.
It comes amid rising energy bills, an increase in council tax, a jump in transport costs and a 1.25 percentage point national insurance hike to help pay for health and social care.
Emma Watkins, managing director of retirement at Scottish Widows, said: “It’s tough right now for households. We know that many households have failed to boost their savings during the pandemic (60%) and that over 70% of households will need to eat into their savings in the next 12 months in order to meet their growing expenses.”
WHAT FINANCIAL HELP IS AVAILABLE?
Data from Scottish Widows points to a rapid decline in the amount of cash UK households had available to spend during the first quarter of the year as higher living expenses bit into disposable income.
In general, and unsurprisingly, only the highest earners were able to add to their savings pots during the latest quarter. Meanwhile credit card borrowing has hit a high of £.15bn. People aged between 25 and 54 have reported the strongest rise in demand for credit.
It’s crucial to be aware of financial help available. There are grants and state benefits to help with energy costs. There’s a one-off £150 council tax rebate that the majority of households will benefit from.
There are also ways to trim your outgoings such as switching to a SIM-only mobile phone deal, tips to cut your food shopping bill, tricks to reduce your travel costs and remortgaging.
If your circumstances have changed, you could be missing out on vital benefits worth thousands of pounds. Take a look at the Turn2Us benefits calculator to check. According to Turn2Us, millions of households are not claiming benefits they are entitled to.
Additional reporting by PA
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