finance

The State of the Average Brit’s Finances – And What to Expect in 2022

The State Of The Average Brit’s Finances - And What To Expect In 2022

A recently released wealth and wellbeing study has revealed that a quarter of people in the UK are expecting their finances to worsen in early 2022. With mounting inflationary pressure, housing costs spiking and employment rates taking a hit last year, this comes as no surprise. Over a year on from the pandemic and multiple lockdowns, economic activity is slowly returning to normal. However, with multiple planned financial changes set for 2022 like revisions and state pension changes, and a rise in rail fares, many British workers will be experiencing a shift in their finances.

Savings Take a Hit

The last few years have been transformational for the finances of the British public. As many found themselves facing increased pressure on their income, they have turned to find ways to combat the squeeze. According to Forbes, 33 percent have resorted to cutting essential spending. Meanwhile, 16 percent took on more debt. Borrowing increased exponentially in the last year as the number of loans grew by 40 percent. However, it is not just the number of people taking out loans that are growing; it is the size of their borrowings as well. Brits are taking out loans that are 31 percent higher as the ease of access increased exponentially with Instant loans by My Quick Loans and other same-day payday loan platforms. 

British Consumers Set to Spend More 

During the lockdowns and over the past 2 years, the average Brit has spent less and saved more. The typical UK household saves £2,160 annually, according to data from the National Statistics and Wealth and Assets Survey. However, experts are predicting that the savings amount being held by Brits will dip this year as they plan to kick off spending sprees on holidays and experiences they have been unable to have in the past 2 years. 

Conversely, there is a growing percentage of Brits who say they are determined to save more after the pandemic. Around 55 percent said they aim to maintain their savings habits going forward. For some, the rising costs of owning a home and retiring are driving their determination. Whether you are saving or splashing out your cash, there are ways to make the most of your money like using a regularly updated budget, learning to separate your essential spendings from luxury spends.

Getting Your Financial House in Order

Around 19 million people are turning their focus to their finances this year. This comes amid shocking revelations that almost half of Brits lack basic financial literacy. In a survey administered by Freetrader to 2,000 British people, 48 percent could not answer basic personal finance questions on ISAs, interest rates, and savings. Now almost a third of them are looking to invest their savings. However, they continue to be hampered by the lack of knowledge on how to do so. 

This is also heavily visible in the rising number of Brits who are working a second job. Around 1 in 4 earn £530 monthly from the second source of income. While 1 in 10 say they do it as a way of pursuing their passion, 4 in 10 admitted that a second job was the only way to increase their disposable income. 

With so many personal finance developments ongoing, it is clear to see that the average Brit’s finances are undergoing some changes. However, with more income coming in and a determined attitude to pay better attention to their finances, it seems like they have gotten off to a good start in 2022.

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