Insights ¦ FLS-2024-Vulnerability-Financial-Resilience

Key Take Aways

1. Over half (49%) of UK adults exhibited characteristics of vulnerability in 2024, representing a slight decrease since 2022.

2. The four drivers of vulnerability identified are poor health, recent negative life events, low resilience, and low capability, with overlapping characteristics affecting individuals.

3. Adults in poor health, particularly those with cancer, MS, or HIV, constitute about 9% of the population, often experiencing mobility and mental health issues.

4. Mental health conditions impacted 17% of UK adults in 2024, with significant behavioural and financial repercussions such as delaying financial decisions and falling into debt.

5. Digital exclusion remains a challenge among older adults, although its prevalence has decreased from nearly 7 million in 2017 to approximately 1.2 million in 2024.

6. Low financial resilience remains significant at 24%, with many adults heavily burdened by domestic bills and credit commitments, especially in northern regions.

7. The population with low savings, at 14%, faces increased risk if income sources are lost, with specific groups such as low-income households and renters most affected.

8. Adults in financial difficulty, particularly those unemployed or from minority ethnic backgrounds, continue to face higher risks with 8% in difficulty, unchanged from 2022.

9. Emotional resilience is declining, with 6% of adults finding it very difficult to recover from negative experiences, often correlating with health and socio-economic factors.

10. Low confidence managing money and low knowledge about financial matters persist, disproportionately affecting the unemployed, younger adults, and those with cognitive or behavioural difficulties.

11. Financial capability is improving, with a decline in adults displaying low confidence, knowledge, and digital skills since 2017, yet there remain substantial segments with significant deficits.

12. The cost-of-living crisis appears to have begun easing, with a notable reduction in adults heavily burdened by bills, yet financial vulnerability remains a critical concern for targeted segments.

Key Statistics

• 49% of UK adults showed characteristics of vulnerability in 2024, down from 52% in 2022.

• 9% of adults (4.8 million) were in poor health and/or had progressive conditions like cancer, MS, or HIV.

• 17% of adults (9 million) had a mental health condition in 2024, up from 13% in 2020.

• 14% of adults (7.6 million) had low savings; unchanged from 2022.

• 13% of adults (7.3 million) were heavily burdened by domestic bills, down 1pp since 2022.

• 8% of adults (4.5 million) were in financial difficulty, unchanged since 2022.

• 6% of adults (3.4 million) found it very difficult to recover from negative experiences, a 1pp decrease.

• Digital exclusion has fallen from 6.9 million adults in 2017 to around 1.2 million in 2024.

• 36% of adults rated their knowledge of financial matters as low in 2024.

• 52% of adults exhibit at least one characteristic of low capability, including digital exclusion and low financial literacy.

• 25% of adults (around 13.1 million) have low financial capability, a decline of 2pp since 2022.

• 19% of adults (almost 9 million) demonstrate poor or low financial numeracy.

Key Discussion Points

• The prevalence of characteristics of vulnerability remains substantial, demanding targeted interventions to mitigate associated risks.

• Overlap between drivers such as health and financial capability suggests complex vulnerabilities that require multi-faceted responses.

• While some indicators like digital exclusion and low capability are declining, they still pose significant barriers for particular demographic groups.

• Mental health’s impact on financial behaviour highlights the importance of tailored support and accessible financial services.

• The geographical distribution reveals regional disparities, notably higher vulnerability and financial stress in northern regions and among renters.

• Adults in poor health, especially with progressive conditions, experience substantial difficulties with managing finances and accessing services.

• The decline in adults who find it very difficult to recover from negative experiences may reflect some societal resilience, but persistent challenges remain.

• The stability of low financial resilience underscores ongoing resilience issues, especially among those with low income and high debt burdens.

• Digital exclusion, though decreasing, still affects older adults, highlighting the need for improved accessibility measures.

• The high proportion of adults with low financial literacy and numeracy emphasizes the need for enhanced financial education.

• The stable rate of adults in financial difficulty and burdened by bills indicates that the cost-of-living crisis continues to impact vulnerable groups.

• Effective strategies should focus on those with overlapping vulnerabilities to prevent adverse financial and wellbeing outcomes.

Document Description

This article is an in-depth overview of the UK’s financial resilience landscape as captured by the Financial Lives survey in 2024. It examines the characteristics of vulnerability, including poor health, recent negative life events, low resilience, and low capability, with detailed insights into associated demographics and regions. The report highlights ongoing challenges faced by vulnerable populations, assesses progress in digital inclusion and financial literacy, and underscores the importance of targeted, evidence-based interventions to bolster financial resilience across key segments. It provides a comprehensive evidence base for senior managers in financial services aiming to refine customer support, product design, and strategic planning amidst evolving societal vulnerabilities.