One in four people are currently in financial difficulty, or claim they would be if they suffered a financial shock, according to recent findings by the Financial Conduct Authority (FCA).
As part of its ‘Financial Lives’ survey, the FCA found that over 4.2 million people had missed bills or loan payments in at least three of the previous six months.
This figure has grown from 3.8 million in 2020.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Millions of people have moved even closer to the cliff edge, as runaway bills and soaring prices stretch their household finances to breaking point.
“The fact that so many of the worst price rises are among life’s absolute essentials, which swallow such a large chunk of lower incomes, means the damage these price rises are doing is profound.”
Additionally, a further 7.8 million people surveyed claimed that bills are a heavy burden.
This number has increased rapidly, from a just 2.5 million in 2020.
Coles continued: “Right now, wages are rising at roughly half the pace of prices, and in the case of the public sector, around a fifth of the pace.
“For those who rely on benefits, these have risen at around a third of the rate of inflation – and aren’t going to go up again until April.
“It’s hardly surprising that so many people on lower incomes are hitting a brick wall financially.
“But the impact is being felt right across the income spectrum. Average earners face the additional threats of much higher mortgage payments when they remortgage, and horrible energy bill hikes when the energy price guarantee comes to an end in April.
“The HL Savings & Resilience Barometer looked at the proportion of people who would have enough cash left over to be resilient a year into the cost-of-living crisis.
“It found that among the bottom half of earners, fewer than 1 in 100 people in each income group had enough to be resilient, and only the top fifth of earners saw more than one in ten people fall into this bracket.”
She concluded: “If you’re struggling with impossible expenses, and you’ve done everything you can think of, don’t put things off until you’ve already missed bills.
“Talk to your providers, explain the situation, and see whether you can work out a repayment schedule that you can afford.
“If you’re struggling, don’t rule out asking for help. Debt charities like Stepchange and consumer bodies like Citizens Advice are experts, and can help you understand your options and deal with your biggest concerns.”
