According to new figures from Royal London, almost half of families with children under 18 say they are close to financial crisis or feeling the pinch, while one in five adults have less than £100 in cash savings, a figure that has remained unchanged for two years.
Sarah Pennells, consumer finance specialist at Royal London, said although the firm’s Financial Resilience report had seen some signs of an improvement in people’s finances in the last year, those still struggling with higher bills and food prices face “difficult decisions” as they try to rebalance their household finances.
“We’re seeing a big divide between those who can absorb higher costs and those making daily sacrifices – cutting back on essentials, dipping into their savings, or going overdrawn at the end of the month.
“After more than three years of rising costs and higher bills, we’re seeing the impact on people’s longer-term finances, as well as their day-to-day spending,” she said.
Housing costs rise
Housing costs are having one of the biggest impacts on resilience, the figures show, with renters particularly struggling with rising costs.
Why Life Insurance Still Matters – Even During a Cost-of-Living Crisis
Sponsored by Post Office
Almost eight in 10 (72%) single-person household renters said their housing costs had risen in the 12 months to February 2025, with an average increase of £218 per month.
Those renting privately saw the steepest rise, averaging at £304 per month, with housing costs for local authority or social housing rising by an average of £159 per month.
Over half (53%) of mortgage borrowers said their housing costs had increased in the last year by an average of £327 per month. Among single mortgage borrowers, the rise was £252 per month, with those living alone paying £298 per month more.
Retirement saving affected
While only 5% of adults have stopped or reduced their pension contributions in the last year, 43% of adults admitted that their pension or retirement plans have been affected by the higher cost of living.
The report also reinforced the need to encourage people to engage with their pensions, as 69% of adults do not know how much is in their defined contribution pension pot, while 52% have not thought in the last year about how much money they may need for retirement.
Tips for struggling families
Sarah Pennells said that for those feeling the squeeze, checking eligibility for state benefits can help to top up bank balances and avoid financial crisis.
She said: “Many miss out simply because they’re unaware of what is available. Reviewing direct debits and subscriptions can also help – save money, and even the smallest changes can add up over time.
“We encourage anyone who’s struggling to visit independent resources like MoneyHelper, our charity partner Turn2us, or Citizens Advice, to explore the support they may be entitled to and take steps to get their finances on track.”
