One in five Brits expect to have no disposable money available to them in 2024 as the pressures of the cost-of-living crisis continue to bite, according to research by Quilter.
The research revealed almost half (46 per cent) of those over 50 do not expect to have any disposable money available to them in 2024.
The latest economic and fiscal outlook from the Office for Budget Responsibility predicted there will be a 3.5 per cent peak to trough drop in real household disposable income per person between 2019 and 20 to 2024 and 2025 – the largest reduction in real living standards since records began.
Claudia Button, financial planner at Quilter, said: “Our research highlights just how much of a devastating impact the cost-of-living crisis continues to have on people’s finances, and it is concerning that one fifth of people expect to have no disposable money available to them this year.
“Not only does this mean they will not be able to afford to spend money on things outside of their everyday essentials, but it also means they are very unlikely to be able to put money aside to build an emergency fund.
“This means should they encounter greater financial difficulty further down the line, they may be more vulnerable to reliance on high interest credit which can be costly.”
The survey, carried out in December among 2,001 adults, highlighted how difficult it has been for people to weather the cost-of-living storm.
Not only does having no spare cash have an impact on people’s ability to spend, but it also has a detrimental impact on their ability to save, Quilter said.
Those with no spare cash will be unable to put aside any money to help build a ‘rainy day’ buffer that could protect them should they come across unexpected costs or other financial difficulties, making them even more vulnerable.
Button said: “It is important that those who find themselves in this situation take action sooner rather than later in terms of assessing their finances and spending habits, as well as reaching out for support if needed.”
Top tips
Button outlined the steps to take to help improve financial circumstances in difficult times.
She said individuals need to be mindful of borrowing if they are struggling to make ends meet and said it is vital to avoid accumulating high-interest debt wherever possible as the current high interest rates can make it incredibly challenging to pay off balances in the long run.
“Though debt is not inherently bad, it can be harmful should you have difficulty in paying it off,” she said.
“The Bank of England held its base rate at its latest monetary policy meeting, and it is expected to maintain its ‘higher for longer’ stance for some time yet.
“As such, credit card users will find it is expensive to carry a balance and individuals with other outstanding debts such as personal loans or car loans could also be facing higher costs.
“Wherever possible, it is important to prioritise paying off outstanding balances as quickly as you can or explore options such as balance transfer, consolidation or refinancing to take advantage of lower interest rates or interest free offers to help lessen the financial blow, and you should seek debt advice where necessary.”
Button said budgeting will be key and starts with assessing incomings and outgoings and putting a plan in place.
“It is a good idea to look back on the past three months of your bank statements to decipher where your money is being spent,” she said.
“This will give you an idea of the regular, monthly payments that go out as direct debits, as well as other outgoings.
“This may help highlight unnecessary spending and where you might need to make any cutbacks, or even where you have money unexpectedly left over that you could put into savings.”
sonia.rach@ft.com
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