Households feel poorer as financial pressures mount

Research from St James’s Place has shown that average household wealth has fallen 17.5% over the last year, dropping from £126,482 to £104,329.

More than a third of people said their financial position has worsened over the last twelve months, while one in five households now say they are struggling financially.

The data finds that the average estimated wealth has fallen by nearly a fifth over the past year.

Every day, financial confidence is also slipping. Just 37% now describe themselves as financially comfortable, down from 42% last year, while one in five (21%) say they are struggling financially, up from 16%. Fewer people also feel financially resilient (61% vs 65%), suggesting households are less able to cope with unexpected financial shocks.

For many, rising living costs remain the main driver. Seven in ten (69%) say this is the primary reason their finances have worsened over the past year, with the cost of food and essentials cited by over half (57%). Other factors include a lack of salary increase (19%), higher rent (13%) and increased tax bills (8%).

However, while financial pressures are weighing on households across the UK, the research highlights big differences in outcomes depending on how people manage their finances. Households with a plan in place to manage their money are consistently in a stronger position, both holding more wealth and feeling more confident about their finances.

On average, households with a financial plan say they have £157,416 in wealth, compared with £70,610 for those without. This advantage is seen across every income level. Among households earning under £20,000 a year, those with a financial plan are around £24,500 better off on average than those without. At the other end of the scale, the gap rises to nearly £200,000 for those earning over £80,000.

The benefits extend beyond wealth. Seven in ten (72%) say having a financial plan makes them feel more confident about their financial position, while half (51%) describe themselves as financially comfortable, compared with just 29% of those without a plan. Three-quarters (76%) also say they feel financially resilient and able to cope with unexpected changes, compared to 52% of those without a plan.

However, despite these clear advantages, uptake has remained flat.  Fewer than four in ten (38%) people have a financial plan in place, unchanged since the research began tracking the nation’s financial health in 2022.

Levels of financial engagement and household wealth vary significantly across the UK. Whilst there are several factors influencing this, there is a continued correlation between household wealth and planning.

London stands apart, with an average household wealth of £171,455 and the highest proportion of people with a financial plan in place (46%). By contrast, planning levels are lower in regions such as Wales (30%), Northern Ireland (33%), and Yorkshire and the Humber (35%), where average household wealth is also significantly lower at £86,847, £100,534, and £73,488, respectively.

Elsewhere, 40% of people in the North West have a financial plan, with an average household wealth of £82,968, while in Scotland, 37% of people are planning with the average wealth standing at £96,918.

Alexandra Loydon, Group Advice Director at St. James’s Place, said “Many households are feeling worse off, with living costs and heightened global uncertainty weighing on confidence and, understandably, affecting how people feel about their finances and the future.

“What our research shows, however, is that while these pressures are widely felt, the outcomes people experience can be influenced by their attitudes to money management. Those who take a more structured approach to managing their money are better placed to build wealth, feel more confident and stay resilient, regardless of their income or circumstances. Despite this, the number of people with a financial plan has not increased over our five-year research period.”

Wealth across the UK	Perceived household wealth	Proportion with a financial plan in place
London	£171,455	46%
Scotland	£96,918	37%
West Midlands	£120,093	39%
North East	£103,934	35%
East of England	£99,829	36%
North West	£82,968	40%
South East	£90,581	35%
East Midlands	£111,109	35%
South West	£86,032	37%
Northern Ireland	£100,534	33%
Yorkshire and the Humber	£73,488	35%
Wales	£86,847	30%