The FCA’s recently published ‘Financial Lives survey’, conducted in February 2020, with a follow-up ‘COVID panel survey’ conducted in October 2020, revealed that 20% (10.7 million) of UK adults had low financial resilience even before the pandemic struck.
Adults described as having low financial resilience are often over-indebted, with little capacity to withstand financial shocks. In the FCA’s survey, people with low financial resilience were unable to withstand a £50 drop in their monthly income or losing their main source of household income for just a week. The October survey revealed a further 3.5 million adults then had low financial resilience, compared with the February data, with the largest growth amongst those aged between 18-34 and employed adults. Nearly 40% of adults have seen their financial situation worsen overall because of the pandemic, while 48% of adults have SELL IN MAY? not been impacted financially. The report outlines that, ‘Comparatively, the retired population has been better insulated from the financial impacts of COVID-19. This is perhaps not surprising as key sources of income for this group – the State Pension and defined benefit pensions – have not changed.’
Improving your resilience
Improving your financial resilience and your ability to withstand financial shocks will stand you in good stead for the future. You can achieve this in many different ways, for example by building up a savings buffer or taking out protection insurance. We can help you shore up your financial resilience.
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