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Managing Household Finances - UK - May 2019

“Managing household finances is a task few can avoid, yet for most it is something to be tolerated rather than enjoyed. Despite an explosion in the number of tools available to help manage finances, over half of those under 35 struggle to balance financial tasks. There are also signs that older consumers don’t appreciate the more proactive role banks are taking to help people manage their finances.”

– Thomas Slide, Senior Financial Services Analyst

This report examines the following issues:

  • What role does technology play in managing household finances?
  • Are financial apps reaching those who need them the most?
  • Does education matter as finances become more automated?

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Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

        • The market
          • Underlying indicators improve in 2018
            • But Brexit uncertainty weighs on confidence
              • New legislation squeezes incomes…
                • …but there is also some good news
                  • Companies and brands
                    • Auto-switching enters the mainstream
                      • Yolt partners with MoneySuperMarket
                        • BGL Group acquires Bean
                          • The consumer
                            • 91% of adults have responsibility for managing household finances
                              • Figure 1: Responsibility for household finances, March 2019
                            • Confidence comes with age
                              • Figure 2: Confidence in managing household finances, March 2019
                            • Bills are a high priority for most households
                              • Figure 3: Priorities when managing household finances, March 2019
                            • Young and the old are most likely to enjoy managing their finances
                              • Figure 4: Enjoyment of managing household finances, March 2019
                            • 38% set a budget for everyday spending
                              • Figure 5: Approaches to managing household finances, March 2019
                            • 79% are happy with how their household finances are managed
                              • Figure 6: Attitudes towards managing household finances, March 2019
                            • What we think
                            • Issues and Insights

                              • What role does technology play in managing household finances?
                                • The facts
                                  • The implications
                                    • Are financial apps reaching those who need them the most?
                                      • The facts
                                        • The implications
                                          • Does education matter as finances become more automated?
                                            • The facts
                                              • The implications
                                              • The Market – What You Need to Know

                                                • Underlying indicators good for households in 2018
                                                  • But Brexit uncertainty weighs on confidence
                                                    • New legislation squeezes incomes…
                                                      • …but there is also some good news
                                                      • Market Drivers

                                                        • Real average weekly earnings grow in 2018
                                                          • Figure 7: Real average weekly earnings (regular pay), January 2014-January 2019
                                                        • Household debt stabilises in 2018
                                                          • Figure 8: Household debt as % of disposable income, 2000-18
                                                        • Household saving ratio fell to an all-time low in 2017
                                                          • Figure 9: Household savings ratio, 1999-2018
                                                        • Employment reaches its highest level on record
                                                          • Consumer confidence returns to growth
                                                            • Figure 10: Trends in how consumers describe their financial situation, three month moving average, January 2017-March 2019
                                                          • Brexit negativity eases slightly
                                                            • Figure 11: Impact of Brexit on economic growth, the cost of living and household income, July 2016-January 2019
                                                          • Switching levels return to pre-crisis levels
                                                              • Figure 12: Number of electricity and gas external switches, 2003-18
                                                            • Inflation remains close to target
                                                              • Figure 13: Contributions to the housing component of the CPIH 12-month rate, January 2017-February 2019
                                                          • Regulatory and Legislative Changes

                                                            • First anniversary of Open Banking
                                                              • Rise in auto-enrol pension contributions
                                                                • Minimum wage increase
                                                                  • Figure 14: Minimum wage rates, 2018-19 and 2019-20
                                                                • Income tax changes
                                                                  • Council tax rises
                                                                    • Ofgem energy cap comes into force
                                                                      • Benefits freeze squeezes lowest incomes
                                                                      • Companies and Brands – What You Need to Know

                                                                        • Auto-switching enters the mainstream
                                                                          • Yolt partners with MoneySuperMarket
                                                                            • BGL Group acquires Bean
                                                                            • Launch Activity and Innovation

                                                                              • Auto-switching enters the mainstream
                                                                                • Lloyds Group embraces Open Banking
                                                                                  • Yolt partners with MoneySuperMarket
                                                                                    • Natwest trials AI driven personal finance app
                                                                                      • BGL Group acquires Bean
                                                                                      • The Consumer – What You Need to Know

                                                                                        • 91% of adults have responsibility for managing household finances
                                                                                          • Confidence comes with age
                                                                                            • Bills are a high priority for most households
                                                                                              • Young and the old are most likely to enjoy managing their finances
                                                                                                • 38% set a budget for everyday spending
                                                                                                  • 79% are happy with how their household finances are managed
                                                                                                  • Responsibility for Household Finances

                                                                                                    • Those who share responsibility enjoy a better financial situation
                                                                                                      • Figure 15: Responsibility for household finances, by age and gender, March 2019
                                                                                                  • Confidence in Managing Household Finances

                                                                                                    • 87% are confident in managing their household finances
                                                                                                      • However most stay in their comfort zone
                                                                                                        • Figure 16: Confidence in managing household finances, March 2019
                                                                                                      • Lack of financial confidence among the young
                                                                                                        • Figure 17: Confidence in managing household finances, March 2019
                                                                                                    • Priorities when Managing Household Finances

                                                                                                      • Mortgage/rent the highest priority for those who have to
                                                                                                        • Figure 18: Priorities when managing household finances, March 2019
                                                                                                      • Affluent households have a greater range of priorities
                                                                                                        • Saving for retirement gets prioritised too late
                                                                                                          • Figure 19: Highest priorities when managing household finances, by average age and socio-economic group, March 2019
                                                                                                        • Retirement is a low priority for Millennials
                                                                                                          • Figure 20: Financial priorities of Millennials, March 2019
                                                                                                      • Enjoyment of Managing Household Finances

                                                                                                        • Managing household finances is a tolerable task for most
                                                                                                          • The strange attraction of managing your finances
                                                                                                              • Figure 21: Enjoyment of managing household finances, by age and gender, March 2019
                                                                                                            • Enjoyment reflects financial situation
                                                                                                                • Figure 22: Enjoyment of managing household finances, March 2019
                                                                                                              • Confidence and enjoyment go hand-in-hand
                                                                                                                • Figure 23: Enjoyment of managing household finances, by confidence, March 2019
                                                                                                            • Approaches to Managing Household Finances

                                                                                                              • Those with ‘tight’ finances are most likely to set budgets
                                                                                                                  • Figure 24: Approaches to managing household finances, March 2019
                                                                                                                • Low income households least likely to switch
                                                                                                                  • Figure 25: Managing household finances, by household income, March 2019
                                                                                                                • Those who lack confidence are missing out on deals
                                                                                                                    • Figure 26: Approaches to managing household finances, by confidence in managing household finances, March 2019
                                                                                                                  • A third of under-35s track spending on their phones
                                                                                                                      • Figure 27: Use of a mobile app that helps to track spending, by age group, March 2019
                                                                                                                  • Attitudes towards Managing Household Finances

                                                                                                                    • 79% are happy with how their household finances are managed
                                                                                                                      • Messages to your younger self
                                                                                                                          • Figure 28: Attitudes towards managing household finances, March 2019
                                                                                                                        • Over half of under-35s struggle to balance financial tasks
                                                                                                                          • Figure 29: Attitudes towards managing household finances, by age group, March 2019
                                                                                                                        • Desire for help differs by age group
                                                                                                                            • Figure 30: Attitudes towards managing household finances, by age group, March 2019
                                                                                                                        • Attitudes towards Money Management Tools

                                                                                                                          • Consumer assessment of money management tools
                                                                                                                            • Spending analysis generates a mixed response
                                                                                                                              • Spending plans viewed more positively
                                                                                                                                • Setting savings goals sets a more positive tone
                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                  • Abbreviations
                                                                                                                                    • Consumer research methodology
                                                                                                                                      • Qualitative research

                                                                                                                                      Managing Household Finances - UK - May 2019

                                                                                                                                      £1,995.00 (Excl.Tax)