Three quarters of Britons believe they will be worse off in this year, with the average person estimating they will be £3,000 out of pocket by the end of 2022.
Despite signs of recovery last year, Britons’ wealth has seen a sharp decline in the first quarter of 2022 as the cost-of-living crisis takes its toll, according to insurance firm LifeSearch’s Health, Wealth & Happiness 2022 Index.
Seventy-five per cent of people said they would be worse off, with the average figure coming in at £252 per month.
Around 5.8million people, or 11.5 per cent of the population, said they had taken on a new form of debt in the last 12 months, while typical debt repayments have doubled to more than £400 per month.
A majority of Britons expect to be out of pocked by the tune of £250 a month, as the rising cost of living and inflation rates force families to cut back on savings in favour of paying bills
Only eight per cent of Britons said they were not expecting to be financially worse off at all in the next year, in a sign of deteriorating financial and mental wellbeing.
Just four per cent of people predicted that their household spending would go down by more than £1,000 a month in 2022, the study found.
Unsurprisingly, rising household bills were a much bigger concern now than they were last year, with almost half saying they were worried about this versus 24 per cent from last year.
A lack of savings was also a top concern for one in five Britons, followed by fears of higher taxes.
Only one in four said they had been able to put money away for a rainy day in 2022 so far.
Many feel they’ve had to work harder, dig deeper and risk more to stay afloat
Debbie Kennedy, chief executive of insurance firm LifeSearch
Debbie Kennedy, chief executive at LifeSearch said: ‘While there may be a sense that after two long years the worst of the pandemic is behind us, the nation’s health, wealth and happiness is still not close to being back to levels seen pre-Covid.
‘In fact, our happiness is at a record low, mental health issues remain high and the energy crisis, inflation and conflict in Ukraine point at another chapter of uncertainty.
‘At a more granular level, our study reveals the pandemic pressures and consequences, where many have been hit harder over the last two years and the ripple effect may continue much longer.
‘Many feel they’ve had to work harder, dig deeper and risk more to stay afloat.’
Just under three-quarters of adults said their mental health had been negatively impacted in the last two years, with the rising cost of living, and Covid restrictions cited as the top causes.
Financial fears: The number of people who are fearing rising household bills has doubled since 2021, amid rising energy bills and soaring inflation rates
Around 40 per cent of Britons said the Covid pandemic had a negative impact on their household finances in the last year, while a nearly third said the pandemic had negatively impacted their mental health, too.
Kennedy continued: ‘It’s hardly surprising that Brits are concerned about their finances in the current climate ,as many are having to face the unthinkable choice of food on the table over heating their home.
‘This is in part one of the reasons that happiness levels are at a record low.’
Additionally, over a quarter of Brits said that increases in everyday spending were heavily impacting their mental health, according to separate research from investment bank BMO.
One in five UK adults said they felt so anxious about the rise in everyday living costs that it kept them awake at night, rising to almost half among millennials.
Financial stress is affecting performance at work
Research from HR firm, Employment Hero, has suggested that financial struggles are also starting to have a visible impact on people’s performance at work.
Nearly 60 per cent of workers in small to medium-sized businesses are reportedly stressed about the state of their personal finances and have said this is having a negative impact on their ability to work.
Worried about money?
If you’re struggling to pay your bills or worried about money, here are some places you can go for support:
StepChange: free and confidential debt and bankruptcy advice
Citizens Advice: independent advice to help with legal, debt, consumer, housing and other problems.
Mind: charity offering support and advice for those suffering with mental health concerns
Age UK: advice for senior citizens who are experiencing financial difficulty
Gov.UK: information and applications for benefits, redundancy and debt
NHS: speak to your GP if your mental health is interfering with your daily life.
Your bank: speak to your bank if you are struggling to pay your direct debit and bills to discuss your options
Bills: if you’re worried you won’t be able to pay your household bills, speak to your provider to discuss payment plans and potential discounts available
One in five employees are said to have lost their motivation at work because of the cost of living crisis, and are seeking a better-paid role elsewhere.
The HR firm suggested that financial stress was causing further mental health concerns for the British workforce, and that employers needed to be aware of employees’ mental health and absence from work due to financial worries.
Some 40 per cent of British workers said that they felt underpaid in their current role, while only 33 per cent said that their pay was above the average salary.
Around half of employees said they were uncomfortable discussing their finances with their boss.
Two in five also said they would like to receive financial support through overtime and bonuses, as well as more financial support options from their employers.
Half of 18 to 24-year-olds said they want their bosses to provide a financial wellbeing officer in the workplace, offering guidance on mortgages, retirement, and savings.
Most employees are also calling for more insight into managing their money, with staff aged between 25 and 35 are 71 per cent more likely to want assistance from their employer on how to budget correctly.
Ben Thompson, CEO and co-founder of Employment Hero, said employers could be doing more to help their employees manage their mental health and finances.
He said, ‘Over the past 12 months, employees have been questioning the type of work they’re doing and how their salaries match their expectations.
‘Employers are under more pressure to retain their staff and ensure that they are prioritising their mental health and overall wellbeing, this includes financial wellbeing too.
‘Regarding conversations on finances, employers need to approach these difficult conversations with a clear and genuine mindset.
‘Total employment care should be at the forefront of all employee experience conversations, and it can be achieved when you recognise and realise the incentives that can put your workforce at ease both mentally and financially.’
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