Financial reality

Facing financial reality – how close is your family to the breadline? 

The 2022 Deadline to Breadline L&G report* provides research for how long families could meeting basic living costs such as mortgage/rent payments, utility bills and food, should they lose their income. With the rising costs of living and ongoing energy crisis, this latest report has highlighted the financial vulnerability of thousands of families in the event of an unexpected shock. 
Whilst we hope that it won’t happen to us, is extremely important to recognise that none of us are unsusceptible to the risks of unexpected shocks. The mortgage or rent will still need paying and the utility bills will still arrive. 
If your income stopped today – what would you do? 
• Is this something you have thought about? 
• Do you have a plan in place? 
• Do you know who you can talk to about protection insurance? 
The financial resilience of UK families has shrunk by a fifth since 2020, down from 24 days to 19 days according to the 2022 Deadline to Breadline report by Legal & General.* Some concerning trends have been revealed with many workers being overly-optimistic about how they would cope financially if their income stopped, along with the removal or use of any savings safety nets being used to help their money go further. 
According to the report, most people overestimate their financial resilience by around 6 weeks, with the reality being many families running out of money in less than three weeks. Nearly 2 million people have no money left at the end of each month and are living from pay check to pay check. This is a rise of 330,000 in the last 2 years. 
The report states that, ‘although annual household income has increased by 11% to just over £38k since 2020, so has the cost of living’. Budgets are now being squeezed beyond belief and families are cutting back where they can. ‘One in three households has less than £500 left after paying for their basic outgoings and one in 17 (6%) is left with nothing.’ 
Have you got an emergency fund in place? 
Evidently, ‘the average UK household has £2,431 in savings and £610 in debt’. It is noted from the report that ‘people believe, on average, that they need around 12k in savings to feel secure. Most people are a long way off this 12k figure, with 60% of households having less than 5k in savings and 16% having no savings at all.’ 
The Protection Conversation 
The ownership of protection policies has increased since 2020, however advisers remain concerned that due to the cost of living crisis and the need for families to make budget cuts, protection insurance may be something people believe they can do without. As advisers, there is a responsibility to ensure clients are made aware of their protection needs -this will help them to have a more financially secure future. 
*L&G Breadline to Deadline Report 2022 
How do I find out more? 
Call us on 01302 866787 and speak to one of our trusted advisers. 
FCA Disclaimer 
According to our research, the content contained in this article is accurate at the time of writing. 
Infomation on this website is NOT bespoke advice to its audience and therefore does NOT constitute financial advice. 
Readers are encouraged to contact our qualified advisers directly for mortgage and protection advice. 
As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments. 
Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. 
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