One consequence of the pandemic is a significant rise in the level of financial vulnerability.
New research from insurer Royal London has found that 15.9 million people, equivalent to 30% of the adult population, now feel more financially vulnerable than they did before the onset of the pandemic.
Of those feeling more financially vulnerable, a third said this was due to a reduced income.
Almost one in five of those feeling more financially vulnerable had a lack of savings on which to fall back during the pandemic.
Other reasons for feeling more financially vulnerable included taking on more debt and being unable to afford living costs.
Financial resilience is essential because it can lessen income uncertainty and provide a cash cushion to help cope financially during uncertain times.
The pandemic is only one example of an event creating financial uncertainty, with recessions coming along at regular intervals.
Despite the importance of financial resilience, only 16% of respondents said they feel very financially resilient, with men more likely than women to say this.
Royal London, working with the School for Social Entrepreneurs, has identified a series of ‘changemakers’; social enterprises creating unique solutions to build people’s financial resilience.
Sarah Pennells, Consumer Finance Specialist at Royal London, said:
“We know that the pandemic has affected millions of people’s financial resilience and that’s why investing in these inspiring Changemakers is so important. Each social enterprise has either direct lived experience, or experience by association, of the problem they’re trying to solve and this comes with the passion to make a difference.
“We believe that these social enterprises can create real change and innovation is at the heart of it. We are delighted to support people who are looking at new ways of improving financial resilience.”
CJ Tayeh, Founder of Flank, which supports young adults on low income to repay debts owed to friends and family, said:
“The biggest myth around financial insecurity is that it manifests in exclusively financial terms. When you immerse yourself in the lives of those struggling to pay their bills or buy groceries, you realise they are also struggling with their mental health, with job prospects, with nutrition to name a few. This means that financial intervention is rarely enough.
“My experience with young people living in social housing and temporary accommodation showed me that financial support needs to be embedded in socio-emotional support. Flank deploys these insights with trauma-informed design and AI technology to provide fairer, kinder credit for everyone.”