Financial wellbeing in January 2024

Summary

• The proportion of households who had missed a housing, bill, loan or credit card payment was at 8.5% in the month to January 12th.
• Six in ten (58%) households reported having made at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month.
• Consumer outlook improved this month with consumers’ confidence in their future household situation recovering 8 points and confidence in the future UK economy increasing by 9 points.
• Despite this improved optimism about the future, more people still think these measures will get worse, rather than better, over the next 12 months.

You can view more data and articles from our monthly tracker survey on our dedicated Consumer Insight Tracker page.

Financial difficulty returns to Autumn levels

Over the last few months we have seen a lot of volatility in our household missed payment rate, with a dramatic rise in November (from 7.6% to 9.8%), followed by an even greater fall in December (to 6.5%). This has now been followed by a significant rise in the proportion of households that missed a payment in the month to January 12th to 8.5%. 

This level of missed payments is on par with those seen throughout most of 2023 (January to October) which ranged between 6.9% to 8.8%. November and December levels were exceptional in falling outside of that range. There is historical precedent for this in which we tend to see more volatility in missed payment rates around the Christmas period, possibly reflective of consumers’ abnormal spending patterns during this time of year. 

Looking closer at the types of missed payments, 5.1% of households missed a household bill payment, 4.4% missed a loan or credit card payment and 2.7% of UK households missed a housing (e.g. mortgage or rent) payment. 

8.5% of households said they had missed a payment in the month to January 12th

The overall missed payment rates were higher amongst certain groups. Households renting continued to have a much higher missed payment rate (15.9%) compared to mortgage holders (6.8%) and owner outrights (2.8%). Furthermore, of the just over 200 Universal Credit recipients in the survey sample, 24% reported having missed or defaulted on a payment in the last month.

15.9% of renting households said they had missed a payment in the month to January 12th

With the recent cold weather gripping the UK, it is unsurprising that energy bills were the most commonly missed bill by those who missed at least one household bill payment (56%), which was higher than council tax (36%), water (30%), phone (29%) and broadband and/or tv package (29%). 

Six in ten (58%) households reported having made at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is slightly higher than the levels seen the previous four months (53%-56%), although the same level seen last January.

Six in ten households made at least one adjustment to cover essential spending in the last month

Current consumer confidence falls slightly…

Consumers’ views on their current household situation fell slightly this month to +13, down from +17 last month and +21 in September. Current household confidence has steadily declined throughout the Cost of Living crisis. 

Consumers who rated their current household situation as poor told us more on how their financial struggles have been impacting them. Their responses show that many of those struggling are facing severe consequences from cost of living pressures.

Numerous consumers said that their mental wellbeing is suffering due to the stress and burden of feeling like they are living from one day to the next, alongside a loss to their social lives.

“Everyday is stressful. We worry about money constantly. [We] rarely use the heating… We are not living, we are existing at this point. No holidays, no luxuries, just stress and worry” Female, 45- 54, South East

“I am barely surviving from one month to another, [I] had to stop socialising and following my hobbies” Male, 55-64, Eastern England

“It is causing major stress and depression. I have totally lost my social life” Male, 45-54, Eastern England

For others, the cost of living is impacting on their physical health, from the food they eat, to keeping warm during the winter months.

“I’m cutting back on the amount of food I buy, I only have one meal a day, I don't put the heating on and I limit myself to no longer than 7 minute showers and only 3 a week” Female, 25-34, West Midlands

“It's very stressful and doesn't help my ill health. I can't afford to put the heating on for very long.” Female, 35-44, Scotland

…but future consumer confidence improves

While the above financial difficulty and current consumer confidence figures show that many households are continuing to struggle through this period of high inflation, consumer outlook is improving. Consumers are feeling a bit more confident about their future household situation and the future UK economy than they were towards the end of last year. Consumers’ views on their future household situation rose this month to a net score of -6, up from -14 last month. Consumers’ views on the future UK economy also rose to -26, up from -35 last month.

Despite this improved optimism about the future, these figures remain net negative, showing that more people still think these measures will get worse over the next 12 months, rather than better. Only about one in five (22%) consumers think the UK economy will get better over the next 12 months, whilst almost half (48%) believe it will get worse (giving the net score of -26). For future household situations, the respective figures were 24% better and 30% worse. It should also be noted that consumers’ who rated their current household financial situation as poor were much more pessimistic about their future household financial situation (54% thinking it will get worse).

Future consumer confidence rose in the month to January 12th

This month we asked people why they think their future household financial situation would improve or worsen. As shown in the word clouds below, a lot of consumers who feel their situation will get better pointed to their disposable income improving, be it through the cut to national insurance contributions, a negotiated pay rise or increases to benefits, the minimum wage or state pensions in April.

“The National insurance cuts help me get more in hand salary too. So, I think I will be a little better off in the next 12 months.” Male, 35 to 44, South East

“I am due a pay rise” Female, 35-44, Northern Ireland

“Due to the triple lock calculation on pensions and improvements forecasts in the economy I feel there is room for more optimism.” Male, 65+, West Midlands

In contrast, pessimistic consumers point to the fact that costs are still rising and feeling this will persist throughout the year.

“Energy has just gone up again, food prices are still going up, everything will go up again in April.” Female, 65+, South West

“The cost of living continues to rise and will impact even more on my disposable income.” Female, 55-64, Northern Ireland

Why consumers feel their household financial situation will…

Summary

This Consumer Insight article has shown that many households are continuing to struggle with the cost of living, with 1 in 11 households missing a payment in the last month (8.5%) and 6 in 10 having to make at least one adjustment (58%). For consumers’ struggling the most financially, this is having a profound impact on their mental health, physical health and social interactions. Despite this, we did see some improvements in consumers’ outlook for the next 12 months, both for their own household financial situation and the UK economy.

Methodology

The fieldwork was conducted by Yonder on behalf of Which between 12th and 14th January 2024. A sample of 2,068 consumers was surveyed online and weighted to be nationally representative.