It's time to talk about debt
- Leigh Dunkley
- 21 March 2022
- 2 mins reading time
The word 'debt' often comes with negative connotations and having debt can cause people to feel anxious, overwhelmed and under pressure when it comes to their financial situation.
According to The Money Charity, across the UK:
The average total debt per household is £63,528
The average credit card debt per household is £2,112
On average, each household spends £4.28 per day on water, electricity and gas
It costs an average of £24.44 per day for a couple to raise a child from birth to the age of 18
With increasing living costs and interest rates currently remaining low, it isn’t surprising that many people rely on debt to fund their cost of living.
48% of people regularly worry about their finances yet only 3% of people would ever share these worries with their employer (1).
However there are two different types of debt:
'Good' debt is defined as money owed for things that can help build wealth or increase income over time, such as student loans, mortgages or a business loan.
'Bad' debt refers to things like credit cards or other consumer debt that do little to improve your financial outcome.
Having 'bad' debt isn’t always something you need to worry about as long as you are making repayments on time and managing the debt appropriately.
MoneyHelper is a free service provided by the Money and Pensions Service. Their website contains some useful information, tools and calculators which may help you to better understand your financial circumstances and plan for the future:
88% of UK adults said that their financial concerns affect them mentally and/or physically (2).
Some debts can have an impact on your credit score. Building a good credit score is important because it can affect your ability to borrow money or access products such as credit cards or loans. You can check your score for free and if it isn’t in the best shape, there are things you can do to aim to improve it: How to improve your credit score.
If you are worried about debt there are organisations out there who may be able to support you. StepChange Debt Charity is one of those organisation and you can find out more information by visiting: Debt Awareness Week 2022.
72% of UK adults said that sorting out their finances is a priority for them in 2022 (2).
If you are experiencing trouble with debt you may want to speak to your bank(s) and/or lender(s) in the first instance. Organisations such as StepChange Debt Charity, referenced above, may also be able to provide support and guidance.
Having a financial plan may help you to avoid falling into debt and seeking the support of a financial adviser could help you kick start the process of creating your own financial plan. To book in for your free financial health check with an adviser please click here.
There are no hidden fees and charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan.
(1) Schroders Personal Wealth, Money and Mind Report, 2020
(2) Schroders Personal Wealth, Financial Wellbeing Research, 2021
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