Blog: Financial vulnerability at Christmas ‘a time when want is keenly felt’

As Christmas approaches, our Director of Marketing, Consumer Insights and Propositions, Lauren Peel and our Social Research Associate, Ellie Suckling take a look at some of the financial challenges people are experiencing during this time of the year.

It’s been a difficult 12 months for lots of people. And for people in financially vulnerable circumstances, the last year has further exacerbated existing issues. Ahead of the release of the next wave of our segmentation tracker we’ve looked specifically at financial challenges that come up at this time of year, for both the general population and those in financially vulnerable circumstances.[1]  

This is the first in a series of updates we are producing to gain further insights into consumers who are in financially vulnerable circumstances and the six segments that make up this group.  

What you need to know
  • People in financially vulnerable circumstances are significantly more worried about the essentials of food, energy and housing 
  • They are also more likely to need to borrow to pay for Christmas and to have cut back on essentials
  • And while there is optimism for next year, January will bring financial challenges and stress with it
Festive spending

No matter what Ebeneezer Scrooge says, for millions of people, 25 December is not a poor excuse for picking a person’s pocket. The average household in the UK is set to spend 80% of monthly income paying for Christmas this year[2]. But after a challenging year, our survey indicates that 57% of financially vulnerable adults are spending less this Christmas, more than the national average of 47%. 

Even with spending less, there’s not enough to go around. Credit is one option for those who don’t or can’t save up for Christmas, and our research has found that almost 1 in 3 people who are financially vulnerable were thinking about, or had, taken out a loan to cover Christmas expenses, compared to 1 in 5 of our nationally representative sample. 

What is also concerning is that over half of financially vulnerable adults would be cutting back on essentials to have enough money for Christmas (56%). Robyn (name changed for privacy), a single mum and part of our Credit Crisis Families segment, talked to us about her Christmas planning last year:

‘Christmas 2022 was different, there was definitely less money. We actually had to save our gas for Christmas day for the two weeks running up to it, and tried to use the electric oven and slow cooker more so we could have heat for Christmas and to do the dinner. It was nice other than that though, it was just me and the kids, which was different as usually it was a big family get together. So, in that sense we really enjoyed it, but there was a lot of worrying about money and when to put the gas on and things like that.’

On top of the spending that comes with Christmas, just under half of people who are financially vulnerable were not going to Christmas events or work parties that they usually would attend (45%), compared to slightly fewer people from the nationally representative sample (37%). At a time when money worries have become a part of everyday life for many, sacrificing socialisation and not alleviating stress in this way is being found to amplify mental health struggles[3]

Figure 1: Statements about managing money over winter

We found through our interviews last year that Christmas was already difficult for some without the additional increases to food and mortgage/rental payments we’ve seen this year. Like for Laura, who is a part of our Squeezed and Sliding segment:

‘This Christmas was different. I have a professional job in the NHS but am on maternity leave, I’ve had to make major cutbacks than what I’d normally spend. I’ve had to borrow money off family. In terms of what I’ve bought and things, it wasn’t different as for my kids they always get the same, but there was a lot less money to spend, especially gifts and food. Normally I could spend £150 a week and not worry about it, but now I have to watch what I spend’ 

Food and energy bills

‘Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts’ says a charity collector to Scrooge in A Christmas Carol. 

Sadly not much has changed. 41% of people in financially vulnerable circumstances agreed that they were desperately worried about feeding their families. This desperation comes at a time when food bank usage is soaring, with the Trussel Trust network delivering an all-time high of 1.5 million emergency food parcels in the six months leading up to September 2023[4].  

On top of this, energy costs continue to be a huge concern. Ofgem emphasise these struggles by sharing that energy debt is at an all-time high of £3bn[5]. We’ve found that 38% of financially vulnerable consumers don’t think they will be able to pay their energy bills this year. That’s dropped slightly from 40% amongst financially vulnerable consumers in 2022, but as other indicators have shown, the added pressure of high food bills may be the primary concern. While Scrooge may have been content sitting in an icy office, millions of people, especially those with health conditions, are at considerable risk. 

Figure 2: Energy and food bill concerns

Signs of inflation easing are welcome[6] but the extreme pressures experienced by households related to food and energy insecurity are still well above normal levels[7]. The inability to escape the persistent hardship of constantly thinking about money, being behind on bills, going without essentials and the health implications of consistently high prices are becoming ‘baked in as the UK’s new normal’, especially for those on lower incomes[8], or those that are financially vulnerable. 

Outlook for the new year

Understandably, future goals are linked to financial priorities and needs, especially for those in financially vulnerable circumstances.

Concerns about the cost of living remain, especially for the financially vulnerable population, linked to keeping up with regular expenses like rent, food and bills, being able to put the heating on, and losing their job. 

On top of this, those who are financially vulnerable are worried about falling into debt or falling further into debt (68% vs 52% of the nationally representative sample). 

Figure 3: Concerns about the cost of living crisis

People in financially vulnerable circumstances are also are more likely to want to get out of debt, with 1 in 3 setting this as a priority for next year (30%). This motivation could be harnessed by the financial sector through appropriate debt consolidation products that meet customer needs. 

Figure 4: Priorities for the next year

It’s not all bleak though. The Ghost of Christmas yet to come does not appear to be a menacing figure with a hooded robe. Compared to a similar time last year, there has been an increase in optimism for the future, with 56% of people in financially vulnerable circumstances showing hope for the future going into 2024, compared to 38% at the same time last year. And interestingly, this is higher than the nationally representative population.

Figure 5: Statements about the future and whether respondents agree

How can we help people be more optimistic?

At Fair4All Finance, we know that access to great products and services that meet the needs of people in financially vulnerable circumstances can make a difference. Our segmentation is designed to help organsiations understand the needs of these customers, and design and deliver solutions that work for them. 

In 2024, we’re looking at what propositions will improve financial resilience for each segment, across credit, savings and insurance. We’ll then work with organsiations to pilot these solutions in market. 

Just like Ebeneezer Scrooge, it’s not too late to become as good a friend, or as good a person, to those in financially vulnerable circumstances. And, like the constantly cheery nephew Fred, there are many things from which we might derive good by which we have not profited.  

What will you be doing to improve financial inclusion in 2024? 

Methodology note

To collate this data, Trajectory asked a nationally representative and financially vulnerable sample of 1,500 people questions through their monthly consumer sentiment tracker from 6 to 13 December 2023. The data was collected through an online survey. 1,500 interviews were with adults across the UK, and 480 of these people meet our definition of financially vulnerable through understanding income, savings and home ownership.

We asked the same questions in December 2022, with some additional questions this year reflecting changes in food prices and illegal money lending. These repeated questions allow us to compare the views and experiences of people in financially vulnerable circumstances into the broader population from a similar time last year. Data was collected between the 1 to 7 December 2022 for the December 2022 analysis. 

[1] Trajectory Partnership ran a survey of 1,500 people 6 December 2023 to 13 December 2023

[2]  Money Supermarket, 2023

[3] Which, 2023

[4] Trussell Trust, 2023

[5] Ofgem, 2023


[7] Resolution Foundation, 2023

[8] Joseph Rowntree Foundation, 2023

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