The pandemic has exposed low levels of financial resilience by many.
New research has found that 19% of adults in the UK say they are not financially resilient. That’s equivalent to around 10 million people. As a result, those with low financial resilience would feel unable to make their finances without relying on a credit card or personal loan.
The research from MetLife UK found that although 60% of respondents said they feel financially resilient, almost a third admitted they would still require financial help from a family member, their partner or someone else. The economic impact of the pandemic has been damaging to the financial resilience of many with 29% of respondents claiming their financial situation has worsened since last March. 8% of respondents said their financial situation had declined significantly, while 19% said it has only deteriorated slightly.
Regardless of feelings of financial resilience, 25% said they have no disposable income on which to fall back on, should they need it. Examples of needing some disposable income include paying unexpected bills or a higher mortgage or rent payment. As a result of living at the limit, a third of respondents said they worry about their short-term financial situation and almost a third worry about the longer-term.
Rich Horner, Head of Individual Protection at MetLife, said:
“Many financial fears have come true for so many over the last 12 months. Having to use up savings to make ends meet, borrow money, pay cuts, taking time off work unpaid due to accident or illness or to care for a loved one – the list is endless.
“The ‘it’ll never happen to me’ premise has never felt so prominent. So, although worrying, the reality is that many people have no savings to fall back on. And unfortunately, it can easily spiral. The combination of worrying about having no disposable income and not having any savings can have a significant impact on mental health and an uneasy feeling of being extremely financially vulnerable.
“We need to support and encourage people to review what solutions are out there in the immediate future but also the longer-term, such as financial protection – a safety net that in cases such as illness, time off work or an accident– can make a real difference. Ultimately, it’s important that people plan today to help their future selves to feel and become financially resilient.