Finney, Andrea D

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                          Finney, A. D. (2012). Facing the Squeeze 2011: Understanding householdfinances and access to credit in the wake of 21st-century recession . In 1stmultinational knowledge brokerage event on "The Role of HouseholdSavings and Debts in a Sustainable Economy". Vienna: Research Institute forManaging Sustainability.Link to publication record in Explore Bristol ResearchPDF-documentUniversity of Bristol - Explore Bristol ResearchGeneral rightsThis document is made available in accordance with publisher policies. Please cite only the publishedversion using the reference above. Full terms of use are available:http://www.bristol.ac.uk/pure/about/ebr-terms.htmlTake down policyExplore Bristol Research is a digital archive and the intention is that deposited content should not beremoved. However, if you believe that this version of the work breaches copyright law please contactopen-access@bristol.ac.uk and include the following information in your message:• Your contact details• Bibliographic details for the item, including a URL• An outline of the nature of the complaintOn receipt of your message the Open Access Team will immediately investigate your claim, make aninitial judgement of the validity of the claim and, where appropriate, withdraw the item in questionfrom public view.Facing the Squeeze 2011 Understanding household finances and access to credit in the wake of 21st-century recession RESPONDER workshop  May 24-25, 2012  Andrea Finney The context for the study • The UK had emerged from recession – But was still facing a difficult economic climate  • Repeats a 2009 study – Noted a ‘correction’ in attitudes and behaviour – Derived from ‘precautionary restraint’ 2 The objective of the study • To explore: – Effect of the economic climate on households – Strategies they had used to cope  • Primary focus was on changes in last 12 months – Longer-term changes were also important 3 The study methods • 30 householders interviewed in depth • All of ‘working age’ • All were credit users – ‘keeping up’ with bills and commitments  • Mix of ‘low’ and ‘middle’ income households  • Mix of mortgagors, social tenants, private tenants • Mix of major drop in income, no major drop  4 Overview of findings: How households were managing  • Three groups emerged: – ‘Managing’ • Most were ‘feeling the pinch’ – ‘Stretched’ • Some were ‘overstretched’ – ‘Over-indebted’ • Deprivation or structural arrears (or both)  • Perceptions did not always match reality  5 Overview of findings: Changes affecting households • Major drops in income – Job loss – Reduced hours or pay – Benefits or child maintenance – Multiple drops difficult to absorb • Increased expenditure – Rise in cost of living – Increased number of dependents – Increased housing costs  6 Overview of findings: Strategies for coping • Born out of necessity not precaution  • Reining in spending • Closer money management  • Drawing down savings • Reliance on unsecured borrowing – Commercial  – Family and friends 7 Theme 1: Reining in spending • Shopping smarter • Cutting back on non-essentials • Reducing waste  • Cutting back on essentials • Going without  • Despite efforts, sums spent were unchanged • Not born out of attitudinal change 8 Theme 2: The complex role of unsecured credit • Cutting back on borrowing – Conscious decision • Increased reliance on credit – ‘Creeping’ debts – Borrowed more than they could afford • Access to credit – Unused balances – Constrained supply – Concern about credit worthiness  9 Theme 3: Home ownership • Mortgage repayments were prioritised • Difficulties eased by falling repayments – The savings were absorbed into budgets  • Contrasts with security among social tenants • Aspirations for home ownership muted 10 Conclusions in brief • Importance of early adjustment – But people fail to recognise warning signs  – And have unrealistic expectations for the future • Perceived lack of need inhibits advice-seeking • A role for creditors  • Coping responses of questionable sustainability  11 Thank you Further information Finney and Davies (2011) Facing the Squeeze 2011 and  Collard, Finney and Crosswaite (2009) Facing the Squeeze were published by the Money Advice Trust and are available from www.pfrc.bris.ac.uk (theme ‘Credit use and over-indebtedness’) andrea.finney@bristol.ac.uk 

Facing the Squeeze 2011:Understanding household finances and access to credit in the wake of 21st-century recession

https://research-information.bris.ac.uk/files/8187812/FacingTheSqueezeMay2012.pdf

Facing the Squeeze 2011:Understanding household finances and access to credit in the wake of 21st-century recession

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