Last year hit our financesand although the worst squeeze is over, it will still hurt in 2023.
The latest edition of the Hargreaves Lansdown (HL) Savings & Resilience Barometer relentlessly rising inflation Millions of people will be running empty by the end of 2022, and we still have a long way to go.
For low-income earners, young people and singles, it can do significant damage to their economic resilience, both now and in the long term.
The Barometer is part of a six-monthly analysis conducted by HL in collaboration with Oxford Economics, which brings together 16 individual measures from official datasets and uses statistical modeling to estimate the overall economic performance of people. build a holistic picture of resilience. This helps us know where we stand now and what the next year has in store for us.
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This result brings one good news. It means that you may have gotten out of the worst predicament.
The number of people suffering from rising prices is expected to reach almost two in five by the end of 2022 and decline gradually to just under a quarter by the end of this year.
Unfortunately, the damage has been done as many have used up their savings and accumulated debt. Our financial resilience has declined significantly over the past six months, removing three-fifths of the resilience he gained during the economic recovery. pandemic From lockdown savings and more.
But the pressure hasn’t felt the same. Low-income earners have been hit hardest because they spend the majority of their income on essentials—and the prices of these are rising at twice the rate of non-essentials.
Overall, just under a third (30%) of households have their finances hit because: price hikebut among low-income earners, this rises to almost 80%.
Worse, they are much less likely to have costs left to cut, and less likely to keep the extra savings accumulated during the pandemic. were actually worse off than they were before the pandemic. For those with no savings left, more people are at increased risk of low-income and unmanageable levels of debt this year.
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But while low-income groups are bearing the brunt, middle-income groups are also starting to feel the pressure, with almost a third showing low levels of resilience. also hits. Those who need to re-mortgage this year will be faced with doing so at very high interest rates, taking a toll on both their savings and debt.
Falling home prices will also take its toll. how fast the price falls.
Not only does it affect people’s confidence and immediate financial position, but it also impacts their long-term plans, with scores of whether they’re on track toward a decent retirement income outperforming renters. Much lower for homeowners.
The decline will be more pronounced among Gen Z and Millennial homeowners, who tend to borrow more to buy when home prices rise, so they will be hit more.
Also, resilience scores for singles who need to grow their single income further were much lower, regardless of whether they had children or not. It has very good economic resilience in comparison.
Some of the barometer details also show that those who make financial decisions with partners tend to be more resilient than those who make them alone.
Millions of people are facing a difficult 2022 and a difficult 2023.
