- Thinking there’s nothing you can do to change your financial situation is closely correlated to having a lower household income (£29,265) and less money left at the end of the month – just £65 on average.
- Those who feel powerless to change things have around a third of the levels of cash savings as those who don’t – and only half of them have enough savings to be financially resilient.
- They’re also less likely to be on track with pensions (26%) or home ownership (20%).
- Feeling powerless can become a self-fulfilling prophecy, but there are some steps you can take to get back on track
Figures from the HL Savings & Resilience Barometer, January 2025: HL Savings and Resilience Barometer | January 2025 | HL
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“How much control you feel you have over your money depends enormously on your financial position. If you’re short of cash, it’s easy to feel there’s nothing you can do to improve your financial resilience or build for the future. Meanwhile, if you feel unable to change things, you can end up just watching helplessly as they get gradually worse.
The impact can be shocking, but there are some things you can do to turn this vicious circle into a more virtuous one.
Some people feel there’s nothing they can do to improve their circumstances, because they’re under so much financial pressure that they can’t see any wiggle room. They tend to have much lower average household incomes than those who feel they can influence their position – at £29,265 compared to £44,596. As a result, they’re likely to have far less cash left at the end of the month – at just £65 compared to £239 among those who feel they can improve things. It means they have far less flexibility to take steps to boost their finances.
They’re likely to be borrowing less, and have smaller monthly repayments, but their lower and tighter incomes mean they’re more likely to be in arrears, at 15% compared to 6% of those who feel they have control over their financial position.
As a result, they can’t protect themselves from short-term challenges. Only 50% have enough emergency savings (to cover at least 3 months’ worth of essential expenses) – compared to 70% of those who think they can affect their own financial position. They have around a third the levels of cash and less than half the investments.
Their feeling of powerlessness risks become a self-fulfilling prophecy in the future, if they don’t find a way to make plans, and an awful lot of people in this position simply can’t. They’re less likely to be on track for a moderate pension income – only 26% are compared with 44% of those who feel they can do something. They’re less likely to be on track with home ownership at 20% compared to 34% of those who feel they have influence over their position. This not only means they have less say over their outgoings at a time of rising rents, but they have less agency in retirement too – when homeowners have usually paid off the mortgage, but renters are still at the mercy of landlords.
What can you do?
Nobody is pretending this is easy, but there are 5 steps that can help.
- Take stock
Often when you feel powerless, you will try to avoid thinking about your biggest issues, so it’s worth getting an idea of where you stand – including debts – plus the interest you’re paying on them, savings, pensions and property.
- Do a detailed budget
The HL Savings & Resilience Barometer shows that people on lower incomes tend to be more organised with their money, so are more likely to have drawn up a budget. However, if you haven’t done this in detail – and drilled into the potential for cutting every single cost – it’s worth setting aside a few hours for this horrible job. Now you can shop around for cheaper energy, there may be new costs you can cut too. The aim should be to free up as much cash as you can to improve your overall situation.
- Address short-term debts
This process should have revealed how much your debts are costing you, and freed up some cash to start paying them down. Paying the ones with the highest rates will mean you face less interest in every successive month, and can put more towards repayments. Once you have them under control, you can turn your attention to building your resilience more broadly.
- Build for the future
We should all be working towards an emergency savings safety net of 3-6 months’ worth of essential spending while we’re working age. We also need to keep an eye on the long term, and whether we’re on track for things like building a property deposit and saving for retirement. Investment in a stocks and shares ISA can help put longer-term goals closer within reach. You don’t need to focus on just one goal at the expense of all others – people will usually put some money towards each of them.
- Get the support you need
Some people will be able to do all this alone. Others will buddy up with family or friends to get some support through the process. However, for others, the problem is more difficult, and you need more help. There are debt charities like StepChange, or the advisers at Citizens Advice, who can talk you through your options.
It’s also worth taking the time to celebrate your successes as you go along. This is hard work, and often progress is fairly slow – especially at the start – so be proud of every step you take. The more you focus on the positives of the changes you have made, the more likely you are to stick with them.”
About the HL Savings and Resilience Barometer
The HL Savings and Resilience Barometer is a huge piece of analysis Hargreaves Lansdown does every six months, in partnership with Oxford Economics, bringing together 16 separate measures from official government datasets to build an overarching picture of people’s financial resilience – from how much savings they have, to whether they’re on track for a reasonable retirement income. It gives an overall picture of whether we are getting better or worse in handling our cash, and tells us where people are vulnerable, and about the gaps in their finances and where they need help in areas such as: controlling their debts, protecting their family, saving for a rainy day, planning for later life and investing to make more of their money.
