Millions on the Brink: One in Four U.S. Adults Faces Financial Instability
Approximately 13.1 million grown-ups experienced limited financial resilience in the previous year, according to the data.
City
regulator has estimated.
According to the data unveiled in the Financial Conduct Authority’s Financial Lives Survey from May 2024, this represents approximately one out of every four British adults.
Individuals are deemed to possess minimal financial resilience if their savings are insufficient to tide them over difficult times, they face significant debts from prior expenses or loans, or they encounter monetary troubles, failing to make payments for at least half of the last year’s months.
The FCA stated that the figure for May 2024 is comparable to what it was two years prior, with the count standing at 12.9 million.
The estimate also indicated that one out of every ten adults lacks any cash savings, whereas 90% have saved some amount of money.
One-fifth (21%) of adults have under £1,000 available for emergencies.
Approximately 35% are believed to have funds invested.
The FCA reported that the number of adults with a current account has risen in recent years, coinciding with a decrease in the population of “unbanked” individuals.
Last year, approximately 52.5 million adults had an active bank account, which is an increase from the 50.8 million reported in 2022. In 2024, about 900,000 individuals remained without a bank account, marking a decrease from the previous figure of 1.1 million in 2022.
The FCA reported a rise in individuals opening basic bank accounts, accompanied by a decrease in rejection rates for applications. These simple accounts allow those with a less favorable credit history to have a place to manage their payments and bill obligations.
Almost 18,000 British adults finished the 2024 survey.
The researchers discovered an increase in the number of individuals using online platforms or mobile apps for their banking activities.
In 2017, 10.6 million individuals who made daily transactions did not engage in online banking or utilize mobile apps; however, this number dropped to 3.3 million by the previous year.
Last year, approximately 26.4 million adults exhibited signs of vulnerability, down from 27.3 million in 2022. This vulnerability may arise due to various elements including poor health, adverse life occurrences, insufficient resilience, or limited capabilities.
Eight percent of adults found themselves consistently overdrawn or typically overdrawn when they received their pay or income last year, which remains consistent with figures from 2022.
Among adults, one out of every 20 individuals (4.8%) reported being frequent users of cash, which marks a decrease from the 5.8% observed in 2022.
Over half (59%) of those who frequently used cash found it increasingly challenging to withdraw money due to closures of local bank branches or post offices.
ATM
either had shut down for good or cut back on its operating hours.
The FCA additionally discovered that when customers look for assistance, it helps make financial pressures more bearable.
Out of the 1.7 million individuals who utilized a debt advisory or debt management program over the past year, sixty-one percent reported that their financial obligations became easier to handle. Creditors offer various solutions aimed at assisting those facing difficulties with making payments.
The study further revealed that individuals with relatively stable finances might still benefit from actions aimed at enhancing their long-term economic well-being.
Three out of five (61%) individuals who possess over £10,000 in investable funds choose to keep at least seventy-five percent of these resources in liquid form instead of making investments. The Financial Conduct Authority aims for an increase in the number of people engaging in conventional investment opportunities as this could enhance potential long-term earnings.
The worth of your investments might decrease just as easily as they could increase.
Looking towards retirement, the research found that a third (33%) of adults with a defined contribution (DC) pension have less than £10,000 saved.
Part of its new plan, the FCA aims to enhance accessibility to assistance, support, and counsel that individuals can afford, enabling them to make well-informed choices about their financial futures.
This initiative has implemented the Consumer Duty, compelling companies to prioritize their customers’ interests above all else, particularly during product development and customer communication phases. This obligation places significant emphasis on ensuring favorable results for consumers.
Sarah Pritchard, who leads consumer and competition efforts at the FCA, stated, “The information we’ve gathered indicates that numerous individuals are financially strained—some cannot even set aside funds for unexpected expenses. Additionally, it’s clear that certain people lack the assurance needed to venture into investing.”
“But there are improvements – more people with current accounts and less digital exclusion. Our strategy will build on this to help people better navigate their financial lives.”
The report indicated that from May 2023 to May 2024, approximately one out of every seven (14%) adults encountered fraud involving banks, payments, pensions, and/or investments, as estimated by the FCA.
The study revealed that card fraud was the most prevalent type, closely trailed by “money muling” and authorized push payment (APP) scams—where victims are deceived into sending funds directly to criminals.
In the majority of cases involving fraud or scams (71%), adults said they reported it, typically to their account provider and occasionally to law enforcement.
To combat scams, seven in 10 (72%) adults reject or ignore unsolicited contact, nearly two-thirds (68%) regularly check bank and credit card statements, and 62% ignore unexpected website links.
However, far fewer check whether financial firms are FCA-authorised (27%) or monitor their credit reports for unusual activity (26%).
Rachael Griffin, the specialist in taxation and financial planning at
Quilter
, said: “The FCA’s Financial Lives Survey lays bare the financial tightrope that millions are walking.”
She added: “With rent, childcare and food costs still elevated, the capacity to save is being squeezed from all sides.”
Claire Exley, head of financial advice and guidance at JP Morgan-owned wealth manager Nutmeg, said: “If you’re not sure if your retirement savings are on track then speaking to an adviser about your retirement lifestyle goals, reviewing your employer’s auto-enrolment policy to maximise contributions and tax relief, and consolidating smaller workplace pension pots are all options to consider.”
Oliver Morley, chief executive at the Government-backed Money and Pensions Service – which provides MoneyHelper, said: “Through MoneyHelper – our free and impartial service – we can help make your money and pension choices clearer by cutting through the complexity, explaining what you need to do and how you can do it.”
Pete Glancy, head of policy at Scottish Widows, said: “Helping people build a financial buffer through better engagement and support will not only improve financial wellbeing and resilience, but also make it less likely that they’ll give up on their pension contributions which are crucial to their future.
“Ensuring that there’s enough housing at an affordable level – whether people are renting or buying – will also help reduce household outgoings during both working life and then in retirement.”
Helen Undy, CEO of the Money and Mental Health Policy Institute, stated, “Our findings indicate that individuals facing mental health issues have double the risk of financial difficulty when they lose their primary source of income.”
And although it’s uplifting to observe increased access to bank accounts among individuals, those dealing with mental health issues continue to encounter significant challenges when utilizing these services. They often struggle to communicate effectively with specialized teams, comprehend terms and conditions, or decline offers for new lines of credit.
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