New FCA Survey Reveals UK's Money Struggles

A comprehensive survey by the Financial Conduct Authority (FCA) has revealed the ongoing strain on UK households as they navigate stagnant wages, rising living costs, and growing debt burdens. The FCA’s Financial Lives study, involving more than 30,000 adults, paints a detailed picture of the financial reality many people face. It shows not just how widespread financial hardship is, but also where support and policy attention are most needed.

Financial resilience remains dangerously low

Roughly 13 million adults in the UK are classified as having low financial resilience. That means they struggle to pay bills, are likely to carry problem debt, and have little or no savings to fall back on. The proportion of people in this category has not fallen since 2022, despite hopes that easing inflation might improve household budgets.

For many, the issue stems from a combination of low wages and insecure employment. Workers in sectors with variable hours or short-term contracts often find it difficult to plan ahead or save. Rising housing costs and utilities also mean that more of each month’s income is spoken for before essentials are even covered.

To build resilience, both systemic and individual changes are needed. On the policy side, ensuring access to stable employment and fair wages is critical. For individuals, the focus should be on building even modest emergency savings. But when budgets are already stretched, saving is often unrealistic without external help. Initiatives like government-backed matched savings accounts or automatic enrolment into pension schemes via payroll could make a meaningful difference.

The UK's growing savings gap

The survey found that:

• 10% of adults have no savings at all
• an additional 21% have less than £1,000
• ...meaning that, if you have at least £1,000 saved, you're better prepared than a whopping 31% of people for financial shocks

These figures point to a major vulnerability across the population, where a sudden expense, whether a car repair or a rent increase, could push people into debt or financial crisis.

The savings gap is not just a problem for those on the lowest incomes. Households across the earnings spectrum are feeling the pressure as inflation continues to outpace wage growth. In many cases, people are cutting back wherever possible and still finding themselves unable to save.

Practical steps to address this include encouraging saving through behavioural nudges, like default savings options in online banking apps, and expanding financial education so people understand the importance of saving for irregular costs. For lower-income families, schemes like Help to Save, which offer a government bonus, are underutilised and need greater promotion.

Debt is widespread, especially among younger adults

Nearly 50% of UK adults report having unsecured debt, with a median balance of £6,300. Among adults aged 18 to 34, the figure is double that at £12,500, though it drops significantly when student loans are excluded.

Younger adults face a uniquely difficult economic environment. Many begin their careers with student debt, face high housing costs, and often have less job security than previous generations. Increasingly, they turn to credit not for luxuries but for essentials or to cover gaps between paydays.

The popularity of Buy Now, Pay Later (BNPL) services reflects this trend. Used by 40% of lone parents and 35% of women aged 25 to 34, BNPL products offer short-term relief but often lack the transparency and consumer protections of regulated credit.

More robust regulation of emerging credit products is essential, alongside clearer guidance for consumers. Meanwhile, accessible, stigma-free debt advice must be made a priority. Services like StepChange can negotiate with creditors and help people find a sustainable way out of debt.

Financial anxiety is on the rise

An estimated 12 million people report that financial issues are negatively affecting their mental health. Among those with outstanding loans or credit agreements, 40% say they experience stress or anxiety related to money.

The relationship between money and mental health is well established. The unpredictability of expenses, pressure from creditors, and feelings of shame or failure can all contribute to a cycle of stress and inaction.

Breaking that cycle starts with normalising financial difficulties. Public awareness campaigns and frontline support workers should emphasise that help is available and that seeking advice does not affect credit scores. Integrating mental health support into financial services is also essential, particularly for those in persistent or severe debt.

Retirees facing insecurity in later life

The FCA’s research shows that 3.8 million retirees fear their pensions and savings will not be enough to sustain them through retirement. This reflects the long-term impact of low pension contributions and rising costs for energy, housing, and care.

Many retirees do not benefit from generous defined benefit schemes and instead rely on defined contribution pensions that may have been started too late for a meaningful income. For those with little or no private pension, the State Pension alone is rarely enough to meet all living costs.

Retirement planning needs to be made easier and more transparent. Those approaching retirement should be encouraged to use free guidance services such as Pension Wise. Meanwhile, Pension Credit remains underclaimed despite offering vital support to pensioners on low incomes.

Banking access and financial exclusion

As more high street branches close, 10 million people now report difficulty accessing basic banking services. This particularly affects older adults, those in rural areas, and people without reliable internet access.

Digital banking has brought convenience for many, but it has also left others behind. Physical access remains essential for some, whether for cash withdrawals, financial advice, or resolving problems.

Solutions could include rolling out more community banking hubs, increasing support for digital literacy, and requiring banks to maintain minimum access standards for face-to-face services.

The FCA’s Financial Lives survey provides a sobering look at the financial reality for millions across the UK. It also highlights clear areas for action, from policy reform to individual support, that could help people move from survival to stability. For many households, the difference between resilience and crisis is measured not in large sums but in timely, practical help.