Research has found that lower-income households are more likely to have had to borrow money or use savings during the coronavirus crisis, putting them at risk of financial anxiety, poor mental health, and debt.
Although the crisis has affected the finances of people from a wide range of backgrounds, those who are are already struggling financially, or have lower incomes, could be the hardest hit.
The research from the Resolution Foundation, a think tank, found that one-third of the lowest-paid fifth of employees have been furloughed, or lost jobs or hours. This is compared to 8 percent of the top fifth of employee earners pre-coronavirus.
The research also found that lower-income households are twice as likely as richer ones to have increased their debts during the crisis.
“Pre-coronavirus Britain was marked by soaring wealth and damaging wealth gaps between households.
These wealth divides have been exposed by the crisis. While higher-income households have built up their savings, many lower-income households have run theirs down and had to turn to high-interest credit.”
– George Bangham, economist at the Resolution Foundation.
The think tank has also found that young people are most likely to have lost work or seen their income drop because of Covid-19. In fact, more than one in three 18 to 24-year-olds is earning less than before the outbreak.
It said younger workers risk their pay being affected for years, while older staff may end up retiring involuntarily.
Citizens Advice Scotland (CAS) has also warned that a ‘personal debt time bomb’ could be imminent. A survey for CAS shows 27% of respondents were worried about making repayments during the pandemic. Many payment holidays are still in place, but will begin to be lifted towards the end of the year. This could leave many struggling to make payments and potentially in debt.
While government schemes have provided help to large amounts of the population, many people remained without support. If you’re facing money worries, it’s better to act sooner rather than later. No matter what financial problem you’re facing, it is solvable.
Those affected by money worries can find that it impacts their mental health negatively. If you are experiencing financial worries, the following organisations can help:
- Citizens Advice – www.citizensadvice.org.uk/
- Mental Health & Money Advice https://www.mentalhealthandmoneyadvice.org/en/managing-money
- Money Advice Service – www.moneyadviceservice.org.uk/
- Money Saving Expert – www.moneysavingexpert.com/
- National Debtline – www.nationaldebtline.org/
- PayPlan – www.payplan.com/
- StepChange – www.stepchange.org/
- Turn 2 Us – www.turn2us.org.uk/