A high level of debt is the new norm
It appears the tough economic climate is having an adverse affect on Britons’ attitude to their personal finances, as their view towards what is a manageable level of personal debt has spiralled out of control.
The younger generation have an even larger ‘debt threshold’, according to the report, as they believe they would have to be in more than £16,646 of debt before finding themselves in serious financial difficulty. The over 55s ‘debt threshold’ is slightly lower at £14,424.
Those living in the West Midlands have the highest regional ‘debt threshold’ before being considered in financial difficulty, with an average figure of £17,118, compared to a lower £13,459 in Yorkshire and Humberside. However, it is clear that the nation as a whole is worryingly immune to the financial reality of being so heavily in debt.
Susan Barclay, head of marketing, Scottish Provident, said: “With the UK’s national debt figure dominating the headlines, it appears this could have had an adverse affect on how the nation view their own personal finances.
“To not believe they would be in serious financial difficulty before they reached debt levels of over £15,837 is a worry, and it underlines how debt has become too readily accepted in the UK. What starts out as a small level of personal debt can quickly spiral out of control, so Britons should ensure they keep on top of their personal spending.”
Nearly one in five (15%) people surveyed believe that they would be entitled to full or part time pay from their employers for at least six months to a year, should they need to take a long period off work due to a lengthy illness. However, the Government’s Statutory Sick Pay scheme only requires companies to cover their workers for up to six months. In spite of this, alarmingly 3% of those questioned said that protection products were not necessary for them because their employers would support their family if they were ill, with a further 3% stating that the Government would offer them full financial support.
Susan Barclay continued: “It is a worry that some consumers still believe that their current employer or the Government would offer them and their family all the financial assistance they need should they be hit by critical illness, disability or even death.
“State benefits are meagre compared to the financial stability offered from a protection product and companies are under no obligation to service the long term needs of an employee. It is vital that people speak to a financial adviser who can give the best available advice for individuals to build up a financial safety net, ensuring they have proper protection in place should the worst happen.”