38 per cent of people are concerned about the impact of interest rate increases on their personal finances and have prioritised paying for basic living expenses such as utilities, childcare, rent, and food for the coming year, according to research from Aegon UK.
According to the research conducted last month, many people are concerned about rising interest rates affecting their ability to get by day-to-day. This figure rises to half among millennials, those aged 21-42, and 43 per cent among those aged 35-54, but falls to 23 per cent among baby boomers, those aged 57-75.
More than a quarter, or 27 per cent, are concerned about the impact on short-term loan repayments such as credit cards, 35 per cent are concerned about higher mortgage payments, and half, or 51 per cent, are concerned that the government will pass on the increase in tax raises.
38 per cent had paying for basic living expenses such as utilities, childcare, rent and food at the top of their financial priorities for the year ahead. This was closely followed by enjoying life, at 34 per cent, including holidays, socialising, theatre and sporting events. The third priority at 32 per cent was building up emergency savings.
Aegon head of pensions Kate Smith says: “We are without question living in unprecedented times but despite the worst of the pandemic seemingly behind us, we are now facing an economic climate that will impact the day-to-day lives of households up and down the country. With inflation now at his highest since before the days that the internet was widely available and higher interest rates looking highly likely, many people will be feeling a financial squeeze like never before.
“Our research shows that people are worried about the pressure on their purse strings from all angles, with a high number concerned about tax rises impacting their take-home pay while soaring interest rates will increase repayments on any debt, including a mortgage. It is unsurprising that the top financial priority for 2022 is paying for basic living expenses. It’s never been more important, regardless of the situation, to make a realistic financial plan for both the short and long-term. Doing so can help with budgeting for immediate and future goals.”