People in the UK owed £1,681 billion by the end of July 2020, according to The Money Charity’s September issue. These figures have crept up by £28.4 billion comparatively from £1,652 billion at the end of July 2019. This adds up to an extra £539 per UK adult over the past year.
Currently, in England and Wales, approximately 28 people are made bankrupt, 51 Debt Relief Orders are granted, and 159 Individual Voluntary Arrangements (IVAs) are entered into – every single day.
Although there are many contributing factors relating to the above statements, much can be attributed to the events that have unfolded world-wide this year. Restrictions imposed as a result of the Covid-19 pandemic have resulted in job losses which has subsequently affected many people’s financial situation. Addiction, over-spending, and poor money management are also common reasons why one might find themselves ‘in the red’.
From the start of this year until the end of July, the Citizens Advice Bureaux in England and Wales dealt with 2,124 debt issues every day. As the furlough scheme comes to an end over the coming months along with the ban on evictions and the halt on bailiff action, it is likely that these numbers will only increase. How the state of our economy recovers and the consequent effects of this is also to be seen.
According to DWP, 12.8 million households (46% of the total) had either no savings or less than £1,500 in savings. Furthermore, it has been revealed that 19.2 million households (68% of the total) had less than £10,000 in savings.
The reasons why we should save are obvious; comfort can be taken from having cash reserves, particularly in times of crisis. Getting married, getting divorced, having children, or getting onto the property ladder are some examples of milestone events in our lives which often incur considerable cost.
Despite good intentions, it appears that saving is easier said than done. The FCA has revealed that 9 million UK adults rate themselves as having low financial capability in relation to personal wealth, money management, knowledge of financial matters and confidence in buying financial services.
Financial education from an early age in life is vital. We believe this is the game changer and should be a focus of Government, education, and charities. In summary, financial understanding is empowerment.