Financial Vulnerability: Understanding the Impact on Budget and Credit
Budgeting and credit are indispensable tools for managing finances, particularly for those experiencing financial vulnerability due to escalating living costs, as revealed in a recent report from the Office for National Statistics (ONS). However, it is becoming increasingly challenging for many people, particularly those in the lower income brackets, to implement effective budgeting and responsible credit use. Adults with an income of £10,000 up to £15,000 annually face over four times higher odds of financial vulnerability than those earning £50,000 or more per year. Moreover, the report highlights the need for better financial education and support for the most vulnerable.
Credit is also becoming a common means for people to make ends meet. In fact, adults aged 25 to 34 years are more likely to borrow money or use credit than usual, with 34% of this group admitting to doing so. Similarly, a higher proportion of adults earning £20,000 to £30,000 per year report using more credit than usual compared to those in the lowest and highest income groups. Although Buy Now Pay Later schemes are becoming more popular, it is important to use credit responsibly and consider alternative options before taking out a loan. Accumulating debt can be difficult to pay off, particularly if interest rates are high.
Parents with dependent children are also feeling the financial pressure, with those living with a child aged 0 to 4 years or aged 5 years or over being the most likely to report being unable to afford an unexpected expense of £850. They are also more likely to report borrowing more money or using more credit than usual compared to non-parents. Financial support and education must be accessible for parents as the cost of raising a child continues to rise.
Craig Wilson, Managing Director of Private Sector at Sopra Steria UK, notes that “With over a quarter of adults across Great Britain now experiencing some form of financial vulnerability, today’s ONS report indicates a significant rise in the number of people unable to keep up with the rising cost of living. As the results have shown, this will likely lead to more and more people turning to credit schemes such as Buy Now Pay Later to simply make ends meet.”
Despite more people now seeking support, many are either unaware of the different types of financial aid available, or are reluctant to identify themselves as vulnerable in the first place. Therefore, energy companies, financial service providers, and government organizations have a responsibility to educate consumers on the types of support available and improve access to services for society’s most vulnerable.
In conclusion, financial vulnerability is a growing concern in Great Britain due to rising living costs. Budgeting and responsible credit use are crucial for managing finances, particularly for those most vulnerable. However, better education and support are needed to help people make informed financial decisions.
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- budget planning
- consumer finance
- cost of living
- credit options
- debt accumulation
- Debt Management
- economic pressure
- financial education
- financial planning
- financial stability
- financial support
- financial vulnerability
- loan options
- money management
- money-saving tips
- personal budget
- Personal Finance
- responsible borrowing
- unexpected expenses