UK household wealth across savings, investments and physical possessions has risen 12% over the last 12 months – with pay rises, better savings rates, investment performance, and paying off debts driving an improved financial picture for many.
The new Financial Health Report from St. James’s Place (SJP) – assessing the UK’s wealth and financial wellbeing levels – shows that, below the headline numbers, the cost-of-living strain has caused more people’s financial situation to worsen than improve. Six in ten (58%) stated that they do not feel financially comfortable
However, while a quarter of the country (25%) reports feeling anxious about the year ahead, the research demonstrates the power of having a financial plan when it comes to boosting financial health, regardless of circumstances and particularly amongst the younger generations.
SJP’s Financial Health Report, conducted annually among adults across the UK, finds that over the last 12 months UK households have seen their wealth across savings, investments and physical possessions rise from £113,154 to £126,483 on average. Those who have seen their financial situation improve report receiving a pay rise as the main contributing factor (31%), followed by better savings rates (27%) and investment performance (21%), while 15% paid off debts.
Despite the overall average increase in UK wealth in the last 12 months, more people feel worse off (31%) than better off (21%), with seven in ten whose situation has worsened saying the cost of living has impacted their ability to manage their money (71%). Those on lower incomes have naturally been hit hardest, with 39% of those earning up to £20,000 a year stating their financial situation has worsened, compared to a fifth (22%) with incomes between £40,001-£60,000 a year and 13% of those earning over £80,000 a year.
It means that the wealth divide between those on the lowest and higher incomes currently stands at £570,864.
Furthermore, as many as six in ten (58%) do not feel financially comfortable, with those earning less than £20,000 a year more than four times as likely to describe their financial position as struggling (23%) than those in the highest income bracket earning over £80,000 (5%).
Over a quarter (26%) say they don’t feel financially resilient (able to deal with life’s unexpected expenses) and would now need their total household wealth to increase by £61,902 to address this – up from £57,317 last year. Three in ten (31%) people across the UK have less than £10,000 in savings, investments and personal possessions, with one in ten (10%) having no safety net at all.
Unfortunately, for a significant number of people, there’s little sign of respite in the year ahead. A quarter (25%) feel anxious about the upcoming 12 months, with rising energy bills topping the list of concerns (28%), followed by rising food bills (23%), and rising fuel costs (15%). As households plan further ahead, a fifth (20%) do not feel they are saving enough to be financially secure now and in the future.
A plan boosts financial health at every level
Against the strain on disposable incomes, SJP’s research highlights the importance of having a plan to build better financial health. Four in ten (39%) UK adults have some sort of financial plan in place2, increasing to 60% amongst those who have received some form of financial advice over the last 10 years. Those with a plan are almost £110,000 better off – with average wealth of £191,536 compared to only £82,364 amongst households without a plan. Those that receive financial advice have seen an additional boost to their wealth, increasing it further to £236,897.
The power of a plan is also evident across all income groups, with those earning under £20k a year still £20,671 better off than those without a plan.
| Income group | Average level of overall level of wealth | With a financial plan | Without a financial plan | Additional wealth for those with a plan vs those without |
| Up to £20k a year | £46,713
|
£62,220 | £41,549 | +£20,671 |
| £20,001-£40k a year | £83,795 | £94,258 | £76,537 | +£17,721 |
| £40,001-£60k a year | £142,614 | £167,993 | £118,922 | +£49,071 |
| £60,001-£80k a year | £230,633 | £241,132 | £216,910 | +£24,222 |
| Over £80k+ | £617,577 | £698,772 | £354,840 | +£343,931 |
Having a plan in place is also found to positively impact wider financial health. More than six in 10 (65%) say having a plan makes them feel more confident in their financial position. Additionally, more than half (52%) of those with a plan describe their current financial position as comfortable compared to 36% without one, and three-quarters (76%) say they are financially resilient versus 57% who don’t have a plan.
Generation Plan – under 35s lead the way in taking control of their finances
SJP’s research finds that it is those in the younger generations who are taking more proactive steps to put financial plans in place than any other age group. The research reveals that under 35s are most likely to have put a financial plan in place (52%), compared to 28% of those over 55 (and 41% of 35-54-year-olds.)
They are also proactive. In the last year, 18–34-year-olds have taken multiple actions to increase their short-term income:
- selling unwanted and second-hand items (29%)
- taking on additional regular (17%) or ad hoc work (17%)
- turning a hobby into a source of income (15%)
- changing jobs to increase income (14%)
- and even monetising their social media (9%)
The majority have also taken steps to improve their longer-term finances within the last two years, with over half (51%) reviewing their investments, and two thirds checking for better savings rates (64%) and ways to make savings on household bills (65%).
Alexandra Loydon, Director of Advice Policy & Operations at St. James’s Place, comments: “The financial health of the nation is clearly a mixed picture. At a headline level, pay rises and better returns on savings and investments have driven an increase in average household wealth this year, but many continue to feel the pinch when it comes to day-to-day expenses. High energy, food and fuel costs continue to impact both the pound in people’s pockets and their ability to put money aside for the future, as well as widening the wealth divide further. While this naturally impacts those on lower incomes the most, wealth can often be tied up in possessions or longer-term savings, so incomes are being stretched more widely.
“Looking ahead to the rest of the year, consumer confidence is likely to remain fragile as several factors contribute to ongoing financial pressures on households. To navigate this backdrop, it’s crucial that people take steps to make their money work harder. Our research shows just how much of a difference a financial plan can make in building better financial health, regardless of age, income or where we live.
“It’s great to see the younger generation – who we’ve termed ‘Generation Plan’ – leading the way in this regard, adopting a proactive approach to both short and long-term finances. Building these habits from as early an age as possible, and maintaining them through all stages of life, will stand them in good stead both now and in the future.”
