It should come as no surprise that a number of UK consumers don’t put holding a conversation about family finances at the top of their discussion list.
Nevertheless, according to HSBC’s latest Power of Protection report, Facing the Future, consumers believe their finances will worsen over coming years, while families are not discussing their long term financial security and are unprepared for increases in living costs. It amounts to UK consumers avoiding discussing financial fears about the future.
In a study of 1,000 people in the UK, looking at levels of financial security and the importance of planning and preparation for a secure financial future, HSBC has found that more than one in four people in the UK (28 pct) already feel constrained by their finances. Meanwhile, one third (35 pct) expects to become financially worse off in the next three years.
HSBC says a number of families just don’t have conversations about managing their money for unexpected events, with 44 pct ‘just about managing’ on a day-to-day basis.
In contrast, 81 pct of the overwhelming majority of people who have had a conversation about their long-term financial security are managing well, HSBC says.
Head of UK Premier & Wealth Insights at HSB, Michelle Andrews, says: “Long-term financial planning allows people to be in the strongest possible position to support their families and achieve their own aspirations.”
HSBC adds that four out of five respondents (84 pct) do not have an insurance policy that would cover regular costs, should a family member have a serious illness, or accident, which would prevent them from working. Meanwhile, just under half (47 pct) say their dependants would not be able to manage financially if they were unable to work, according to data from the study.
To compound this, three quarters of people surveyed (75 pct) have not considered putting a will or testament in place, and 79 pct do not have a retirement plan.
HSBC says the majority of those interviewed see their family’s health and wellbeing (74 pct) as most important to their own future. However, and despite this, over three quarters (88 pct) feel they do not have enough money to look after their family’s health; according to the data, those who are regularly supporting someone financially already spend over half (54 pct) of their disposable income on that person.
The research also found one in three people (35 pct) put their own aspirational goals aside to support other family members.
The study delves further into choices, families make, with over half (55 pct) choosing to pay for their child’s university/higher education, compared to 45 pct preferring to finance health and social care for their elderly parents.
Andrews says, “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. ”
Based on the research findings, HSBC has identified four actions that may help people better prepare their families to face the future:
- Identify your priorities
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; don’t neglect your own aspirations when planning for the future.
- Assess your finances
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.
- Plan for the whole family
Unexpected life events can have knock-on effects for the whole family – bear this in mind when reviewing whether you have enough financial protection in place.
- Talk about the future
Make time to talk to your family about the future. Discuss what could happen to them in the event of life-changing circumstances, and what financial safeguards you have in place. If you need help, seek professional advice.
The Power of Protection is an independent consumer research study into global protection needs and trends, commissioned by HSBC. It provides authoritative insights into people’s concerns about the future and how they are protecting themselves financially, around the world. This report, Facing the future, is the third in the series and represents the views of 13,122 people in 13 countries and territories: Argentina, China, France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore, Taiwan, UAE, UK and USA.
The findings are based on a survey of those aged 25 and over from a nationally representative online sample in 12 countries, and a nationally representative face-to-face sample in the UAE. The research was conducted by Kantar TNS between March and May 2017.
Since The Power of Protection study began in 2016, more than 30,000 people have been surveyed worldwide.