Budgeting won't save a generation on the edge of debt |
Right now, millions of people are not facing one financial crisis. They are facing one shock after another. We are heading into another energy crisis, and for millions of households this will not be painful, it will be the moment things finally break.
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The reality is that a huge number of under 40s are already living on the edge of problem debt, with one in three 25- to 34-year olds in Great Britain battling “negative wealth”, where debts outweigh assets, according to the Fairness Foundation. They are not overspending or being reckless. They are simply trying to survive a cost of living crisis that keeps hitting them again and again.
Energy bills, rent, food prices, and interest rates keep rising. Then life throws up an unexpected challenge - a car repair, a broken boiler, a surprise bill - and suddenly your finances are at risk of spiraling out of control. For many, it is no longer a case of “if” something goes wrong, it’s a case of when.
For people living alone, the challenge is even more drastic. Our research shows that the “singles tax” increases annual expenditure by over £10,000 per year on average.
And yet the same argument keeps coming back. People are told to cut back, budget better, and be more disciplined. That argument might have made sense years ago, but not now.
Every day our debt advisors speak to people who believe they have done everything right. They work full time, track their spending carefully and avoid unnecessary purchases. They have already cut back on holidays, nights out, subscriptions, anything that can be deemed as ‘unessential’. Still, they cannot get ahead.
The reason is simple. Wages are no longer keeping up with the costs of basic living.
Rent and mortgage payments now take up more than a third of income for young workers. Energy bills are unpredictable, despite these companies posting record profits each year. Everyday essentials that once felt manageable now feel relentless. At that point, budgeting alone stops being the solution because their wages simply can’t keep up anymore.
This is why financially responsible people are falling into debt. Not because they are careless, but because the margin for error has disappeared. One unexpected cost is now enough to push someone into a crisis.
This is the part of the cost of living crisis that is still being ignored. The people struggling are not always the ones we expect. They are people with stable jobs, who normally would be financially secure. People who never imagined they would need help with problem debt.
Continuing to blame individuals is not just inaccurate, it’s damaging. It hides the real issue of the growing gap between wages and essential living costs. When most of someone’s income is already dedicated to trying to live, telling them to cut back further is just not plausible.
What needs to change is the tone of the conversation. This is a structural problem, not a budgeting problem. Until wages, housing costs and energy bills are brought back into balance, more financially responsible people will be pushed closer to problem debt.
The cost of living crisis is no longer about tightening belts, it is about survival. And unless that reality is recognised, the number of people living one unexpected bill from financial disaster will only keep growing.
Arielle Flynn is Head of Advice at UK Debt Expert
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