The Salary Calculator

New data from the Financial Conduct Authority (FCA) paints a troubling picture of UK finances.

According to a recent survey from the UK’s financial regulatory body, one in 10 have no cash savings, and a further 21% have less than £1,000.

As purse strings tighten and money worries mount, this week at The Salary Calculator, we’ll look at:

• What the findings reveal about the UK’s financial challenges 
• What’s driving these challenges
• Tips for navigating financial crisis
• The role employers play in supporting financial difficulties
• Proposed changes to provide support

What do the findings reveal about the UK’s financial challenges?

The FCA first started collecting data on the UK’s financial circumstances back in 2017, with its latest report presenting the body’s fourth snapshot. 

Having gathered responses from nearly 18,000 people, the survey provides a comprehensive profile of UK finances.

First, the good news.

Digital exclusion is down to 2% from 14% in 2017, and the number of people using debt advice is up (3.2% in 2024 versus 2.7% in 2022), with many finding their debts more manageable after seeking advice (61%). 

However, when it comes to financial resilience, one in four (13.1 million) are struggling, facing low savings, missed bills and heavy debt burdens. 

A total of 4.6 million people are without a financial buffer and say they would be unable to cover their living expenses for up to one week if their main household income source was lost. 

These stats are echoed by data from YouGov in March, which revealed that 56% of Britons said they’d been affected by cost of living pressures, with 22% unable to make ends meet and afford essential costs. 

“On the frontline of debt advice, we see every day how a lack of financial resilience pushes people into financial difficulty. Without rainy day savings or access to affordable credit, it can be harder to cope with life events and shocks, like falling ill, splitting up with your partner or losing your job,” commented Grace Brownfield, head of influencing and communications at National Debtline.

And without a parachute, borrowing is on the rise. The use of high-cost credit was up in 2024 (6.4%) from 2022 (5.3%), while 2.8 million (5%) said they had persistent credit card debt. 

The survey also found that more people are using Deferred payment credit (DPC), otherwise known as unregulated Buy Now, Pay Later (BNPL).

In 2024, 20 per cent of adults were found to have used DPC in the last 12 months, and 17% of all DPC users used it frequently. Among the most frequent users were lone parents (40%) and women aged 25-34 (35%).

What’s driving these challenges?

These figures come against a backdrop of rising rent, food prices and energy bills.

Indeed, in April, ONS data found that cost of living ranked as the most important issue facing the UK today. 

The same survey revealed that 72% had seen their cost of living increase in the last month — up from 66% in March — with 92% putting this down to their food shop becoming more expensive and 80% attributing this to higher energy bills. 

And amidst a number of new benefit changes, organisations have raised the alarm that, for some, tougher times could be ahead. 

In April this year, a nationwide freeze on housing benefits came into effect. At the time, national homelessness charity Crisis said the freeze represented a real-terms cut and warned it would push more people “out of the private rented sector and into homelessness.” 

Now, a new poll commissioned by The Salvation Army has revealed that, in the shadow of the freeze, 48% of those surveyed were worried an extra £100 expense would leave them unable to pay their rent or mortgage. 

Tips for navigating financial crisis

These mounting financial struggles are having a knock-on effect on people’s mental health and wellbeing, too. 

According to the FCA data, twenty-two per cent of adults disclosed that they felt overwhelmed and stressed when dealing with financial matters, a statistic which has remained unchanged since 2022. Meanwhile, 40% of those with credit or loans said that they suffer with either anxiety or stress as a result of their financial situation.

Of those suffering from poor mental health — around 9 million adults — 25% said they put off dealing with financial matters, and 18% had fallen into debt as a result of not wanting to deal with their financial situations. 

Alongside this, research from the Money and Mental Health Policy Institute shows that people with problem debt are “significantly more likely to experience mental health problems,” with 46% of those in debt also suffering from a mental health problem. 

“If you’re struggling with your finances, the best thing to do is seek debt advice”

“Financial challenges can deeply affect mental health, often leading to anxiety and depression,” said Norma Cassius, a money management consultant and psychotherapist. 

Cassius advised that support from organisations like StepChange and MoneyHelper can provide guidance and a “safe space to share struggles,” while highlighting the importance of creating a realistic budget, which she said is “easily done” with free budgeting tools in banking apps.

“If you’re struggling with your finances, the best thing to do is seek debt advice,” Brownfield said. “Nine in ten people we helped at National Debtline last year saw their debts reduce or stabilise, while three in four reported a positive impact on their emotional or mental health.”

But despite the benefits, the FCA survey found that embarrassment can be a barrier to accessing help. 

“It’s crucial to break the stigma around seeking debt advice, especially during the current cost-of-living crisis affecting us all. By fostering open conversations and sharing recovery stories, we can inspire hope and encourage others to seek the help they need,” said Cassius. 

What role do employers play in supporting financial wellbeing? 

According to experts, employers also play a central role in supporting financial wellbeing. 

“As the main income provider, they’re uniquely placed to offer practical financial wellbeing support, from access to affordable loans and guidance to helping people build confidence through simple steps like creating a spending plan or managing debt,” said Abby Birch, financial wellbeing and money expert at My Money Explained. 

Adding: “Without action, the risks are real: stress, lost productivity, and higher turnover. Supporting financial wellbeing isn’t just a nice-to-have; it’s essential.”

Indeed, the Chartered Institute of Personnel and Development’s (CIPD) 2025 Good Work Index (GWI) revealed the extent to which financial wellbeing and work performance are linked.

“Supporting financial wellbeing isn’t just a nice-to-have; it’s essential”

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A survey of 5,000 employees revealed that: 

• For 31%, money worries had negatively affected their work performance
• Nineteen per cent had lost sleep due to worrying 
• Fifteen per cent said financial concerns had caused health problems like stress
• Thirteen per cent said their worries made it hard to concentrate or make decisions at work. 

The CIPD outlined that employers can support workers through this by ensuring that pay outcomes and processes are fair, paying workers as much as is affordable, becoming an accredited Living Wage Employer, and creating support mechanisms to reduce the risk of employees falling into financial difficulties. 

Meanwhile, Conor D’Arcy, Head of Research and Policy at the Money and Mental Health Policy Institute, shared with Mind that providing mental health training to line managers can be a helpful tool for recognising when employees are struggling.

Flexible working can also be beneficial, D’Arcy explained: “It means they might have time to access external help, such as visiting a financial advisor. It also might allow parents or those with caring responsibilities to better manage their time to avoid some of the additional costs these responsibilities can bring.”

What proposed changes could help provide support? 

The FCA has also outlined a number of measures aimed at supporting consumers. According to the body, this includes setting “high standards” through the implementation of the Consumer Duty, supporting the government to develop a national plan for financial inclusion, and its InvestSmart campaign, geared towards helping consumers make “better-informed investment decisions.”

“We need to do more at a national level to prevent financial difficulty occurring”

Meanwhile, from a policy perspective, new rules are coming into effect next year to bring BNPL in line with other types of credit. According to Emma Reynolds, Economic Secretary to the Treasury, these new rules will protect shoppers from debt traps.

Brownfield told The Salary Calculator that the government’s Help to Save scheme can be useful for building up a small safety net for those who are eligible but added that more action should be taken at a national level. 

“We need to do more at a national level to prevent financial difficulty occurring. Government must ensure the welfare system provides adequate and effective support when people experience life shocks and make building financial resilience a new national mission,” added Brownfield.

This was echoed by Richard Lane, Chief Client Officer at StepChange Debt Charity, who called for the government to expand the Help to Save scheme and work with employers to expand workplace savings schemes.

“We also want to see the Government invest in safe options for those who can’t afford to save to cope with unexpected costs, including a permanent national crisis support scheme, building on the Household Support Fund and a national no-interest loan scheme, and by working with the financial services industry to expand affordable, low-cost credit.”

Elsewhere, Helen Undy, Chief Executive of the Money and Mental Health Policy Institute, outlined that banks need to make their services accessible and offer people more tools and support to “stay in control of their finances and savings,” from spending controls to carers’ cards. 

Undy added that the organisation also wanted to see the FCA “go further” in making sure firms act on their obligations under the Consumer Duty to deliver better outcomes for customers.