Brits struggling to achieve financial goals due to squeeze on living standards

BYREBECCA TOMES
DECEMBER 31, 2021
(IFA Magazine)

 

Seven in 10 Brits are finding it harder to achieve their financial goals now than they did a decade ago because of a squeeze on living standards, new research from investment platform eToro reveals.

Its survey of 2,000 people reveals most Brits find it harder today to achieve financial security, save for retirement, buy a home or find the cash for the things they want than they did in 2011.

The main reasons Brits give for their struggles are the rising cost of living (69%), wage growth not matching inflation (56%), runaway house prices (42%) and economic underperformance (35%).

Data from the Office for National Statistics (ONS) shows the average weekly wage has grown by 29% in the past 10 years, barely keeping ahead of prices, which have jumped 20.2% over the same period.

At the same time, ONS data shows average house prices have rocketed by 61% in the past 10 years – more than twice the rate of wages. A home now costs around 8 times average wages in England, and over 12 times in London – a number that has increased by 40% in the past decade.[1]

eToro’s research shows that it is younger Brits who are feeling the crunch in living standards the most.

Some 72% of those aged under 40 say it is more difficult now than it was a decade ago to achieve their financial dreams, compared with 69% of those over 40 who said the same.

Similarly, women were far more likely to say it is harder these days to achieve their financial goals, at 74%, compared with 67% of men.

When asked what actions Brits had taken to make it easier to achieve their financial ambitions, 55% said they had reduced their spending, 46% had built up their cash savings, 38% had created a financial plan, 32% had paid down their debts and 25% had invested in the stock market.

Separately, some 46% of respondents said they believe investing to be the best way to achieve their financial aims, compared with just 18% who said it wasn’t.

Broken down by gender, men (53%) were far more likely to say investing was the best way to achieve their financial goals than women (39%).

eToro’s Global Markets Strategist, Ben Laidler, comments: “The UK economy has been in second gear ever since the financial crisis and, the fact is, that has had a negative impact on living standards for many people – the young, in particular.

“Wages have barely outstripped price inflation over the past decade, while the enormous rise in house prices over the past 10 years has pushed home ownership out of reach for many people, especially low earners or those wanting to live in or around major cities.

“It means Brits are now having to be much savvier with their money if they want to achieve their financial dreams of saving for retirement, buying a home or simply achieving financial security.

“That means slashing spending, building up cash savings and paying down debts for most people. However, it’s interesting to see that a huge chunk of the population believes that investing provides the answer.

“That is perhaps unsurprising considering that savings interest rates have been pitifully low, meaning often savers’ cash has failed to keep up with inflation. It has also meant that the only viable way to achieve decent returns over the past year has been to invest in the stock market.

“It has arguably never been easier or cheaper to invest, and we expect more and more people to turn to investing in the next few years, regardless of whether the decline in living standards corrects itself or not.”

[1]https://www.ons.gov.uk/peoplepopulationandcommunity/housing/datasets/ratioofhousepricetoresidencebasedearningslowerquartileandmedian

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