While half (46%) of Britons say they feel financially secure, only 11% meet the benchmarks for true financial security, according to a new report.
The report showed that although many Britons feel they are coping day to day, far fewer are actually well placed to manage rising living costs, or changes in employment or longer-term needs like retirement.
The Financial Readiness Index from fintech Iress gave the UK an overall score of 44.2 out of 100, placing the nation firmly in the ‘financially uncertain’ category.
Just 19% of those surveyed for the report were fully prepared to meet all their financial needs now and in the future, while 17% were not ready to meet any of their needs at all.
Higher income did not guarantee greater readiness, with a notable proportion of households earning over £100,000 reporting insecurity (18%) and 23% saying they are not confident in being able to live the life they want.
Alistair Morgan, UK CEO of Iress, said: “The Index shows that large numbers of people are navigating financial complexity without the financial foundations they need to negotiate bumps in the road. The worrying issue is that people think they are more financially secure than they actually are, leaving them underprepared and underprovided for when they hit a financial crunch point.”
Men scored higher than women on overall readiness, with scores of 47.0 and 41.5, respectively, reflecting greater confidence and reporting more consistent financial behaviours.
Readiness also changed noticeably with age.
Scores were lowest among 18 to 24-year-olds (37.4), who are still building financial foundations, before rising to 45.9 for those aged 25 to 34. However, readiness dipped again for 35 to 44-year-olds (41.5), a group facing some of the greatest financial pressures from mortgages, childcare and rising costs.
The highest scores were seen among those aged 55 and over (48.3), reflecting more established savings habits, lower debt levels and clearer long-term plans.
Iress’ Financial Readiness Index was compiled from a survey by YouGov between 10 and 13 October among 2,103 UK adults.