Middle-earning households has the worst gaps in their finances

Latest data from Hargreaves Lansdown has found that middle-earning households has the worst gaps in their finances are in long-term planning aith almost two thirds score ‘poor’ or ‘very poor’ when it comes to investment (62%), and around half get the same score for pension planning (48%).

The analysis showed that middle earning households make an average of £34,026 with around a third doing poorly when it comes to debt (35%) and protection (30%). When it comes to saving and balancing the budget, one in five score ‘poor’ or ‘very poor’ (21%).

Sarah Coles, Head of Personal Finance, Hargreaves Lansdown said “The enormous pressure on middle earners is starting to lift, as wage rises, taxes fall, and inflation shrinks. It means for many of them, they’ve finally arrived in the light at the end of the tunnel. Unfortunately, after such a long period of struggling, as their eyes adjust to the light, they can see they’re standing among the wreckage of their financial resilience.

“Pressures had been rising for this group since the pandemic, as the result of both inflation and frozen tax thresholds, which pushed more of them into paying more tax. However, inflation is now back to 2%, and being outstripped by wages. At the same time, National Insurance cuts this year mean that taking into account all the NI and income tax changes of since 2021, the average full-time worker is £340 a year better off than if none of it had happened.

“This is reflected in the fact the Barometer shows they have £176 left over at the end of the month, which means 41% have enough wiggle room to be considered resilient. It’s not an astounding sum of cash, but the fact they’re not entirely running on empty makes a real difference.

“However, such a long period of being stretched to breaking point has taken a toll on financial resilience. Long-term planning is the most striking Achilles’ Heel of middle earners. Most of them do a solid job of balancing the budget and putting money into short-term savings, but half of them (48%) are falling seriously short when it comes to investment and pensions. There are also worrying gaps in their insurance cover and growing debt problems.”