Early financial education plays a vital role in shaping individuals’ ability and confidence in managing money effectively as adults. Financial services brands can take an active role both in this early education, and in providing life-long support for adults.
Financial concerns are making it difficult for consumers to think beyond the present. With many still struggling under the weight of rising costs, long-term financial goals are being set aside, as money once saved for the future is now being redirected toward daily expenses.
Digital tools are still a niche choice for many when managing finances, as most consumers prefer the familiar methods they’ve relied on for years. However, younger consumers are increasingly recognising their value, using these tools for support and guidance. This shift is helping them manage their finances more effectively without relying solely on trial and error, and even making household budgeting more enjoyable.
This report looks at the following areas:
- Market dynamics and the key macroeconomic factors impacting household finances
- Responsibility for managing household finances, including demographic analysis
- How well consumers feel they were prepared to manage money, their confidence with money, and how the two are interconnected
- Consumers’ financial habits, including budgeting habits and adoption of digital tools
- Consumers’ financial outlook and how it is shaping their management of household finances
Household finances are generally stable, but many consumers feel the cost of living isn’t improving. As a result, covering essentials and making budgets stretch remain top priorities.
Charlie Landsborough, Financial Services Analyst
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EXECUTIVE SUMMARY
- Opportunities for the household finances market
- Providers must support vulnerable consumers to build financial confidence
- Impacting early financial education is key to shaping how consumers handle household finances
- Banks need to raise awareness of their educational resources
- Market dynamics and outlook
- The crisis mindset still looms large…
- …but growing consumer confidence points to signs of recovery
- Graph 1: financial confidence index, 2017-25
- What consumers want and why
- Most are responsible for managing household bills
- Graph 2: responsibility for managing household finances, 2025
- Brits are reassessing financial priorities
- Financial health shapes consumers’ priorities
- Graph 3: household financial priorities, by ‘high priority’, 2025
- Consumers rely on various sources for guidance on managing household finances
- Most are confident managing their finances, but acknowledge they could have been better prepared
- Graph 4: preparedness from education and upbringing to manage household finances, 2025
- Graph 5: confidence in ability to manage household finances, 2025
- Young Brits are turning to social media for money tips
- Consumers are taking a proactive approach to household finances
- Financial worries make it hard for consumers to see beyond today
- Innovation and launch activity
- Banks are turning to gamification to support healthy money habits
- Banks are evolving branches to adapt to changing customer needs
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MARKET DYNAMICS
- Market drivers
- Inflation is still the key factor affecting consumers’ finances
- Graph 6: CPI inflation rate, 2021-25
- Average wages outstrip growth in prices
- Graph 7: average wage rises and CPI, 2021-25
- Consumers remain sensitive to rises
- Graph 8: issues faced by consumers in the last two months, 2025
- Rising cost of essentials puts increasing pressure on household finances
- The crisis mindset still looms large
- Most Brits are managing, but things haven’t really improved
- Graph 9: the financial wellbeing index, 2023-25
- Growing consumer confidence points to signs of recovery
- Graph 10: financial confidence index, 2017-25
- The Bank of England cut the base rate again, but borrowing pressures remain
- Wider economic concerns impact confidence
- Graph 11: consumer attitudes towards the economy and global affairs, 2025
- Global uncertainty has the potential to cause real challenges for household finances
- Regulatory and legislative changes
- FCA implements new access to cash regime
- Open Banking embarks on a new chapter
- FCA outlines measures to support home ownership
- Consumer credit landscape is being reshaped
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WHAT CONSUMERS WANT AND WHY
- Responsibility for household finances
- Most Brits have some responsibility for managing household bills
- Graph 12: responsibility for managing household finances, 2025
- Consumers are taking on financial responsibility later in life
- Priorities for household finances
- Brits are reassessing financial priorities
- Graph 13: household financial priorities, 2025
- Rising costs push essential expenses into focus…
- …while non-essentials take a backseat
- Financial health shapes consumers’ priorities
- Graph 14: household financial priorities, by ‘high priority’, 2025
- Rising costs have highlighted the importance of safety nets
- Financial confidence
- The majority of Brits feel confident managing household finances
- Graph 15: confidence in ability to manage household finances, 2025
- Providers must help struggling consumers become money confident
- Graph 16: confidence in ability to manage household finances, by financial situation, 2025
- Providers are exploring ways to help consumers become financially confident
- Financial confidence reaches parity between genders
- Graph 17: confidence in ability to manage household finances, by gender, 2025
- Financial preparedness
- Most Brits believe they could have been better prepared to manage money
- Graph 18: preparedness from education and upbringing to manage household finances, 2025
- Households are calling for more support from banks
- Financial education shapes future confidence with money
- Graph 19: preparedness from education and upbringing to manage household finances, by confidence in ability to manage household finances, 2025
- Increased focus on financial education is key to empowering future generations
- NatWest is tackling money confidence among young Brits
- Information channels
- Consumers rely on various sources for guidance on managing household finances
- Graph 20: sources of information for managing household finances, 2025
- Consumers lean on loved ones for financial guidance and support…
- …but financial service providers still have a key role to play
- Young Brits are turning to social media for money tips
- Providers are embracing the role of social media
- Older consumers tend to stick to what they know
- Approaches to managing household finances
- Brits are confident they understand their financial situation, but there remains a lack of planning in household finances
- Graph 21: approaches to managing household finances, 2025
- Majority of Brits know how much their bills cost…
- …but providers need to encourage more proactive budgeting
- Using multiple bank accounts is a popular budgeting method for younger consumers…
- Graph 22: agreement with statement ‘I use different bank accounts for my bills and day-to-day spending’, by age, 2025
- …and digital tools appeal to their tech-savvy preferences
- Brits are finding the fun in finances
- Attitudes towards managing household finances
- Financial worries make it hard for consumers to see beyond today
- Almost half of Brits are leaning on savings to fund daily expenses
- Graph 23: agreement with statement ‘I’ve had to use my savings to pay for everyday expenses in the last 12 months’, by financial situation, 2025
- Providers need to empower consumers to plan for the future
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LAUNCH ACTIVITY AND INNOVATION
- Launch activity and innovation
- Banks are turning to gamification to support healthy money habits
- Lloyds partners with Lumio to help couples in manage finances
- Moneyhub launches new API Recipe to help savers reach their goals
- NatWest introduces Family-Backed Mortgage to help first-time buyers
- Nationwide partners with Rightmove to launch property lending check
- Aviva commits more than £4 million to Citizens Advice
- Banks step up security measures to combat mobile banking fraud
- Starling launches Safe Phrases campaign to prevent voice fraud
- Banks are evolving branches to adapt to changing customer needs
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APPENDIX
- Report scope and definitions
- Abbreviations and terms
- Consumer research methodology
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