Britain’s mounting debt leads to increased consumer money worries

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It’s no secret that Brits love to spend. The UK is the second most indebted G8 nation, behind Canada. Between 2012 and 2017, household debt in the UK increased by 7% to reach in excess of £1.6 billion, according to official government statistics reported by The Guardian. What’s worrying is the 19% increase in consumer credit during the period. A combination of credit cards, store cards, loans, and overdrafts; predictions by the Office for Budget Responsibility (OBR) anticipate that this will account for 47% of household income by 2021.

As Brits continue to borrow and rely on credit, what impact is it having on our personal wellbeing? True Potential Investor creates a quarterly Tacking The Savings Gap Consumer Savings and Debt Data report, which looks at the UK’s evolving attitudes to spending, saving and investing.

The Q3 2017 edition of the report from the shares ISA provider has found that 33% of UK consumers worry about their finances at least once a day, while more than half (54%) do so once a week. On average, we worry about money three times per week.

Women are also more likely to worry about money than men. Almost 40% of women have these financial woes on a daily basis, compared to just 26% of men.

How frequently an individual worries about money can be influenced by their employment type. Interestingly, the employment band that worries most about their finances is actually those in full-time employment with an additional income from a side-line activity (45%). Perhaps this group has had to take on an additional job to pay of their debt, explaining their higher level of financial anxiety.

This employment type has the highest frequency of daily money worries across all occupations. This contrasts with 36% of part-time workers, 34% of self-employed people and 31% of single job full-time employees.

Family commitments and the number of dependent children can impact the frequency of money worries. Overall, single parents with children under the age of 18 worry most about money, with 41% saying they do so on a daily basis. This is significantly higher than couples with no children (28%), couples with grown-up children living at home (27%) and single adults with no children (35%).

Who has the least money worries, and therefore can assume the most comfortable financial position? Almost a quarter (22.5%) of over 55s said they never worry about money. This is in stark contrast to the 5.5% of 18-24 year olds who said the same. This could likely be a result of where they are in life; 18-24 year olds could be starting out in their careers or saving for a property, while the over 55s are reaching or have reached retirement age and are usually more financially settled.

Despite Britain’s widespread money worries, survey respondents in the Q3 2017 report still took out an average debt of £1,110. Despite the warnings from the Bank of England of a “spiral of complacency” in terms of consumer debt, it seems that Brits are continuing to take out new debt, regardless of their pre-existing money worries.

Further findings from the report suggest that Brits are unwilling to wake up to the reality of their debt and financial position. 90% admit to lying about their finances to hide the scale of their debt, while 86% say they have openly lied to parents, friends, partners and colleagues about their debt.

Our attitude to debt now is impacting our financial outlook and stability both now and in the future. We’re constantly reminded of the importance of saving towards our pensions and preparing for retirement, so how is our debt impacting our pension pots?

The Q3 2017 report details that 45% of people put nothing aside for their pension in the quarter. Interestingly, this was most common in the 45 to 54 year old age category, with 47% adding nothing to their retirement funds. 18 to 24 year olds followed closely behind with 44%, aligning with the previous findings of money worries in this category.

In the previous quarter, 32% of people failed to make a pension contribution, significantly lower than Q3 2017’s performance. While everyone will have their individual reasons behind why they didn’t contribute to their pension, it could be assumed that a driving factor is Britain’s growing problem with debt.

What’s clear is the need to actively work to improve our financial situation. Through clearing our debts as soon as possible, we could free up more available income to contribute to our pension savings, which could have a huge impact on how comfortable we are in later life.