Recent findings from Scottish Friendly and the Centre for Economics and Business Research (Cebr) shed light on the financial challenges facing UK households. The Family Finance Tracker report reveals that over a third of consumers (33.5%) feel unable to plan beyond a rainy day fund buffer until 2025. Despite some relief from cost-of-living pressures, nearly half of respondents (42.2%) find it increasingly difficult to balance their financial priorities compared to a decade ago.

Moreover, planning for the long term presents a significant hurdle for almost a third of respondents (31.5%). Certain demographic groups, including women, parents with children at home, renters, disabled individuals, and the long-term sick, struggle disproportionately in this regard.

The study, based on a survey of 2,600 UK consumers, underscores the prevalence of immediate financial concerns. For 36% of respondents, immediate savings goals such as creating a rainy day fund and covering everyday bills take precedence. Meanwhile, long-term financial goals, including retiring early and paying off mortgages, rank in the middle of priorities for 32% of respondents.

As households grapple with these challenges, they are turning to financial instruments that offer stability and accessibility. Cash ISAs emerge as the preferred vehicle for long-term financial plans, chosen by over a quarter of respondents (25.9%), followed closely by pensions (22.1%) and investment ISAs (17.2%).

Kevin Brown, Savings Specialist at Scottish Friendly, highlights the complex dynamics at play. While household spending power has improved compared to the pandemic’s peak, it remains below pre-crisis levels. This ongoing struggle underscores the need for a balanced approach to financial planning. As the UK economy aims for sustained growth, households can hopefully transition from focusing solely on immediate financial goals to incorporating long-term strategies.

Efforts to support households in navigating these challenges are crucial. Providing accessible financial education, tailored support for vulnerable groups, and promoting diverse financial products can empower households to weather economic uncertainties and plan for a more secure future.

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Last Update: May 6, 2024