The UK’s sustained cost of living crisis is eroding people’s confidence in managing their money, with a third (33%) feeling they have made poor financial decisions in the past two years, according to data from a recent report by AKG, sponsored by Standard Life.
The research found that people are most likely to feel they had made poor decisions around savings (13%), followed by debt (10%), investments (8%) and pensions (7%). More than one in ten (12%) feel unsure of where to go for support, and a similar number (13%) feel alone when thinking about their finances.
The current economic environment is taking its toll on financial decision making, with almost two-fifths (37%) of UK adults saying the impact of inflation has made them more cautious.
This is also impacting mental health, with 40% saying they have felt stressed trying to make financial decisions in the past two years.
Even when not actively making decisions, many still feel anxious about their finances. Just under a third (32%) feel anxious about money matters at present, while just over a quarter (27%) feel they are coping with their finances currently but will struggle if costs continue to rise.
Facing mounting financial pressure and anxiety, many consumers feel unsupported, with two in five (43%) saying that the financial services market does not provide enough resources to support financial decision making when customers are in difficult, stressful, or vulnerable situations.
A similar number (42%) said they would value extra guidance and advice on their finances.
Commenting on the findings, Chris Hudson, Retail Intermediary Managing Director at Standard Life, part of Phoenix Group said “UK households have faced a barrage of financial challenges over the past couple of years, with the initial shock of high inflation swiftly joined by a rapid succession of interest rate rises. Understandably, many consumers are feeling increasingly anxious about their finances and finding the pressure of making the right decision today overwhelming.”
“While these decisions can be daunting, there’s a huge amount of support out there and nobody needs to struggle alone. It’s clear that as providers we need to get better at signposting people to advice and guidance services to ensure they get as much support as possible so they understand that decisions taken today can have long-term consequences on the financial outcomes of tomorrow.”
Matt Ward, Communications Director at AKG said “We know from this body of research and many others that a wide range of consumers need more help when it comes to understanding and making financial decisions. Access to affordable financial advice remains challenging for many consumers and so outside of the mainstream advice market financial services needs to continue to develop and widen the availability and access to useful information, guidance and advice. Whilst we are experiencing challenging times it is undeniably a good opportunity for the financial services industry to prove how helpful and supportive it can be.”
Riffat Tufail, Head of Customer Vulnerability at Standard Life, part of Phoenix Group said “We’re seeing an increase in financial vulnerability at the moment, and it’s no surprise that this is hitting people’s confidence in making decisions about their money. It’s vital that we come together as industry to help as much as we can, and make sure we are listening and reacting to the multitude of challenges people are facing. There’s a lot of support out there, and we have an important role to play in making sure people know how to access it.”