Families unprepared for increasing living costs

A new study has found that many people believe their finances will worsen over coming years, but families are not discussing their long-term financial security and are unprepared for increases in living costs.

HSBC said its report  found that more than one in four people in the UK already feel constrained by their finances, with over one-third expecting to become financially worse off in the next three years. 

Many families do not have conversations about managing their money for unexpected events, with 44% of families who are just about managing day-to-day never having had a conversation about their long-term financial security. 

In contrast, 81% of people who have had a conversation about their long-term financial security say they are are managing well. 

Four out of five respondents do not have an insurance policy which would cover regular costs if a family member has a serious illness or accident which would prevent them from working. 

Just under half said their dependants would not be able to manage financially if they were unable to work.

Three-quarters of the 1,000 people surveyed have not considered putting a will in place, and 79% do not have a retirement plan. 

Michelle Andrews, of HSBC,  said: “Long-term financial planning allows people to be in the strongest possible position to support their families and achieve their own aspirations. 

“We would encourage everyone to think about the future and regularly assess their financial situation. It’s important to understand both the positive and negative effects that expected and unexpected events can have, to ensure we can confidently plan for the future."

HSBC has identified four actions which can help people better prepare their family to face the future:

• Think about your priorities in life. Make sure you have a financial plan in place that addresses your needs, as well as those of your family. 
• Consider how financially secure you feel. Think about whether any financial support you are giving to others is likely to increase or decrease in the future and if you need to update your financial plan. 
• Unexpected life events can have knock-on effects for the whole family. Bear this in mind when reviewing if you have enough financial protection in place. 
• Make time to talk to your family about the future. Discuss what could happen to them in the event of a life-changing circumstance and what financial safeguards you have in place. If you need help, seek professional advice.