Even earlier than the onset of the COVID-19 pandemic, UK customers have been already juggling a number of monetary challenges, and lots of felt nervous about their monetary scenario. The pandemic has impacted customers’ funds additional, with many missing monetary resilience and confidence of their monetary future.
Monetary well-being isn’t nearly having a sure checking account stability or quantity of investments. It’s about whether or not individuals really feel assured they will each handle their day-to-day funds and plan for the longer term. For some individuals, monetary safety is about whether or not they will pay their payments on time or put cash apart for an surprising medical invoice. For others, monetary peace of thoughts is realizing they’ll have the funds for to dwell comfortably till the tip of their life.
As monetary providers companies improve their deal with enhancing clients’ financial well-being, they want to higher perceive their clients’ monetary wants, develop services that may have a optimistic affect on their monetary well being, and assist them obtain their monetary targets. Forrester’s Financial Well-Being Segmentation helps companies higher assess their clients’ degree of monetary resilience and perspective towards their monetary scenario.
Forrester’s Monetary Properly-Being Segmentation
UK Shoppers Fall Into 4 Distinct Monetary Properly-Being Segments
To assist monetary providers companies perceive the place UK customers stand on the monetary well-being spectrum, we surveyed 2,519 on-line adults in 2020 and located that:
- 31% of UK customers are Cushioned Savers. Cushioned Savers don’t dwell paycheck to paycheck and don’t really feel anxious about their monetary scenario. This section faces few monetary hardships. Even so, they nonetheless have monetary challenges equivalent to constructing financial savings, affording a home, or dealing with losses of their investments, inventory market, and/or retirement funds. The vast majority of UK’s Cushioned Savers understand their present monetary scenario as snug (56%) or describe themselves as steady (47%) in relation to their funds.
- 30% of UK customers are Safety Seekers. Safety Seekers don’t dwell paycheck to paycheck, but they do really feel anxious about their monetary scenario. Their high monetary challenges are constructing financial savings, affording a home, and experiencing a current discount of earnings of their family. When requested about how they really feel about their funds, 37% say they really feel unsure, whereas 28% say they really feel anxious.
- 20% of UK customers are Carefree Spenders. Carefree Spenders dwell paycheck to paycheck but don’t really feel anxious about their monetary scenario. The three high monetary challenges holding them again are affording a home, constructing financial savings, and paying for primary day by day bills. Nonetheless, almost 1 / 4 (24%) of these Carefree Spenders say they understand their present monetary scenario as steady, and one other 20% describe their monetary scenario as snug.
- 18% of UK customers are Stretched Spenders. Stretched Spenders dwell paycheck to paycheck and really feel anxious about their monetary scenario. Their high monetary challenges are paying for primary day by day bills, affording debt or mortgage funds, and affording a home. Fifty-eight % of them say they really feel overwhelmed by debt. When requested how they really feel about their monetary scenario, they most frequently say they really feel anxious and careworn.
The UK has a better proportion of Cushioned Savers and Safety Seekers than different international locations we checked out as a part of this research. Whereas some UK customers — notably these with low incomes — have seen a discount of their earnings because of COVID-19, many British households have built up their savings for the reason that starting of the pandemic. That is largely because of a fall in discretionary spending throughout lockdowns. Within the face of the pandemic and a recession, many UK customers have additionally develop into extra prudent and have began saving usually to construct emergency funds. Nevertheless, even for many who will not be residing hand to mouth, planning for the longer term or realizing methods to make investments is especially tough given the financial backdrop. COVID-19 has derailed even the best-laid retirement plans. Past assist with planning and saving for retirement, clients additionally want recommendation on methods to decode completely different funding merchandise and create an funding technique.
For an summary of the state of monetary well-being within the UK, take a look at our newest infographic.
Corporations can map their very own clients to those 4 segments and achieve perception into their monetary attitudes, behaviors, and curiosity in or use of particular private monetary administration instruments, providers, or recommendation. By understanding which segments their clients fall into, monetary providers companies are higher outfitted to tailor their monetary experiences. Join through an inquiry to study extra.