WELSH HOUSEHOLD WEALTH REACHES AN AVERAGE OF £76,889 IN THE LAST YEAR, BUT SIX IN 10 DO NOT FEEL FINANCIALLY COMFORTABLE

WELSH HOUSEHOLD WEALTH REACHES AN AVERAGE OF £76,889 IN THE LAST YEAR, BUT SIX IN 10 DO NOT FEEL FINANCIALLY COMFORTABLE

• Household wealth in Wales (excluding property) stands at £76,889 but 62% of Welsh people are not financially comfortable
• SJP’s Financial Health Report highlights how, across the UK, those with a financial plan are nearly £110,000 better off than those without
• A new ‘Generation Plan’ is emerging in the UK with under 35s nearly twice as likely to have a financial plan than over 55s

Welsh household¹ wealth across savings, investments and physical possessions stands at £76,889 – as 38% of people in Wales report an increase in their overall household wealth increase in the last 10 years.

However, the new Financial Health Report² from St. James’s Place (SJP) – assessing the UK’s wealth and financial wellbeing levels – shows that, below the headline numbers, the cost-of-living strain has caused more Welsh people’s financial situation to worsen than improve. Over six in ten (62%) state that they currently do not feel financially comfortable.

However, while a nearly a third of Welsh people (32%) report feeling anxious about the year ahead, the research demonstrates the power of having a financial plan when it comes to boosting financial health, regardless of circumstances and particularly amongst the younger generations.

SJP’s Financial Health Report, conducted annually among adults across the UK, finds that over the last decade, those in Wales who have seen their financial situation improve, report pay rises (32%), rising house prices (23%), and making lifestyle changes to save more (23%) as the main contributing factors to their increase in wealth.

A plan boosts financial health at every level

Against the strain on disposable incomes, SJP’s research highlights the importance of having a plan to build better financial health. Four in ten (39%) adults across the UK have some sort of financial plan in place², increasing to 60% amongst those who have received some form of financial advice over the last 10 years. Those with a plan are almost £110,000 better off – with average wealth of £191,536 compared to only £82,364 amongst households without a plan. Those that receive financial advice have seen an additional boost to their wealth, increasing it further to £236,897.

The power of a plan is also evident across all income groups, with those earning under £20k a year still £20,671 better off than those without a plan.

Having a plan in place is also found to positively impact wider financial health. More than six in 10 (65%) say having a plan makes them feel more confident in their financial position. Additionally, more than half (52%) of those with a plan describe their current financial position as comfortable compared to 36% without one, and three-quarters (76%) say they are financially resilient versus 57% who don’t have a plan.

Generation Plan – under 35s lead the way in taking control of their finances

SJP’s research finds that it is those in the younger generations who are taking more proactive steps to put financial plans in place than any other age group. The research reveals that under 35s are most likely to have put a financial plan in place (52%), compared to 28% of those over 55 (and 41% of 35-54-year-olds.)

They are also proactive. In the last year, 18–34-year-olds have taken multiple actions to increase their short-term income:

• selling unwanted and second-hand items (29%)
• taking on additional regular (17%) or ad hoc work (17%)
• turning a hobby into a source of income (15%)
• changing jobs to increase income (14%)
• and even monetising their social media (9%)

The majority have also taken steps to improve their longer-term finances within the last two years, with over half (51%) reviewing their investments, and two thirds checking for better savings rates (64%) and ways to make savings on household bills (65%).

Alexandra Loydon, Director of Advice Policy & Operations at St. James’s Place, comments: “The financial health of the nation is clearly a mixed picture. At a headline level, pay rises and better returns on savings and investments have driven an increase in average household wealth this year, but many continue to feel the pinch when it comes to day-to-day expenses.  High energy, food and fuel costs continue to impact both the pound in people’s pockets and their ability to put money aside for the future, as well as widening the wealth divide further.  While this naturally impacts those on lower incomes the most, wealth can often be tied up in possessions or longer-term savings, so incomes are being stretched more widely.

“Looking ahead to the rest of the year, consumer confidence is likely to remain fragile as several factors contribute to ongoing financial pressures on households. To navigate this backdrop, it’s crucial that people take steps to make their money work harder. Our research shows just how much of a difference a financial plan can make in building better financial health, regardless of age, income or where we live.

“It’s great to see the younger generation – who we’ve termed ‘Generation Plan’ – leading the way in this regard, adopting a proactive approach to both short and long-term finances. Building these habits from as early an age as possible, and maintaining them through all stages of life, will stand them in good stead both now and in the future.”

SJP outlines simple steps to help build a financial plan:

1. Identify your financial goals – start by identifying what your financial goals are. Split this out by short term goals e.g., saving for a holiday and medium-long term goals, such as buying a house or saving for retirement. Once you know what you’re working towards, you can then work backwards to see the steps to take to achieve them. Identifying when you’d like to achieve these goals by and how much you need to save is key.
2. Assess your finances – track your income and expenses to see how much money is coming in and going out of your account every month. Tallying up how much you’re spending on, for example, subscription services, clothes, food etc. is a useful exercise which may help identify areas you can cut back in order to save more for your financial goals identified in step 1).
3. Build an emergency fund – if the last few years has taught us anything it’s that our financial picture can shift at a moment’s notice. Having a financial buffer to fall back on, in the face of the unexpected such as ill health or redundancy, can help keep your finances afloat and provide peace of mind in a potentially stressful time. You should aim to have three to six months of living expenses in an easily accessible account. Save some money every month to put towards your emergency fund, which will build up over time, for when you may need it.
4. Save and invest smart – as savings rates are beginning to fall, take advantage of higher fixed-term savings rates while you can. For your longer-term goals, this can help you earn more interest and work towards your goals faster than putting all of your savings in an easy access account. Additionally, start investing to boost your income further, even if it’s just a small amount. Opening a Stocks and Shares ISA can be a good start. Ensure to diversify your investments to spread your risk and protect against market shocks.
5. Review your plan – personal and financial situations often change., such as when you have a new job, pay rise or start a family etc. Review your financial plan regularly to ensure you’re on track to meet your goals and adjust for any life changes.
6. Consider seeking professional advice – if you’d prefer extra guidance and expertise, particularly when it comes to more complex financial situations or circumstances, seeking professional advice can be useful to help navigate your finances and achieve your goals.