One in three workers have had to create extra income to make ends meet

New consumer survey and spending data from the Vanquis Financial Wellbeing Index has revealed that one in three workers earning under £40,000 are creating additional income streams to make ends meet. At the same time, households continue saving less than £3 in every £100 earned.

Despite widespread efforts to manage money carefully, many households simply don’t have enough left over to save. A quarter say their income is too low or too unpredictable to save regularly, while 29% say they have saved nothing over the past six months. A further 27% say unexpected costs are wiping out what they do manage to set aside – with groceries (25%), car repairs (19%) and utility bills (17%) being the most common triggers.
Bills are making this harder. Spending data shows water bills have risen 30% in the past year, with rent and mortgage costs also up 9%, and council tax up 7%.

Most households are already doing what they can to stretch their money further. Two thirds (77%) are cutting back on non-essential spending to ease the pressure, while 64% are buying more own-label grocery products and 60% are switching to cheaper supermarkets.

Despite ongoing pressures, there are some early signs that the worst could be easing for many. Spending data shows income for households earning under £40,000 grew 9% over the last quarter, while quality of life spending is cautiously rising, with entertainment and leisure up 7% year-on-year, travel and holidays up 4%, and fitness up 6% over the same period.

However, the pressure of sustained financial difficulty is still impacting wellbeing and confidence about the future. Around 42% of people in households earning under £40,000 say their financial situation is affecting their mental wellbeing, 30% say it Is impacting on their physical health. Around two thirds say the cost-of-living crisis is “not getting any better.”

This edition marks the first publication of the Vanquis Financial Wellbeing Index score – a new measure that will track the financial health of UK households over time across four areas: saving, borrowing, spending and planning. Households earning under £40,000 score 68 out of 100, placing them in the moderate band – managing from month to month, but not yet building the financial security they need

Ian McLaughlin, CEO of Vanquis Bank, said “This data paints a vivid picture of the ongoing cost-of-living squeeze on hard-working Brits. People are doing everything right – finding extra sources of income, cutting back, managing their money carefully – yet rising essential costs continue to erode the financial headroom they need to get ahead.

“While there are encouraging signs that spending is beginning to stabilise, the bigger challenge remains converting short-term resilience into long-term financial security. Too many households are finishing the month with little or nothing left to save. Without that buffer, financial confidence remains fragile.”