Middle-aged borrowed to cope with the cost-of-living crisis, while young have turned to friends and family, and lower-income households to food banks

Different coping mechanisms are being used by different groups to get through the cost-of-living crisis, with middle-aged people running up debts, young people turning to friends and family, and poorer people resorting to more extreme measures like eating less and visiting food banks, according to new analysis published today (Thursday) by the Resolution Foundation.

The Foundation’s new report Hoping and coping – supported by the Health Foundation – uses data from a YouGov survey of 10,122 adults to assess the various approaches people have employed to navigate the cost-of-living crisis in recent months, and how they differ across income and age groups.

The report notes that almost everyone has been affected, with three-quarters (75 per cent) reporting cutting back on spending.

Older people (aged 75 and over) and those living in the richest fifth of households have been more insulated from the crisis, as they were the most likely to report that their financial situation was no worse than in 2022 (57 per cent of those aged 75 and over, and 53 per cent of the richest adults said this, compared to 43 per cent of adults aged 18-24 and 27 per cent of the poorest adults).

While some coping mechanisms have been widely used across all age groups – between 41 and 48 per cent of people aged 18-74 reported using savings to help make ends meet (though just 32 per cent of those aged 75 and over did so) – there have been significant differences elsewhere.

The younger middle-aged (aged 35-44) have been the most likely to turn to formal lending – such as credit cards, overdrafts or other formal loans – in recent months. Over one-in-three (37 per cent) have done this – twice the rate for those aged 55 and over (16 per cent), and significantly more than the population as a whole (26 per cent).

Younger people, on the other hand, were most likely to rely on help from friends and family. One-in-four 25-34-year-olds received financial help from these sources in the past year, compared to 13 per cent among those aged 45-54, and just 2 per cent among those aged 65 and over.

The “bank of mum and dad” has played a critical role in supporting young people throughout the past year: 83 per cent of 18-24-year-olds and 67 per cent of 25-34-year-olds – 10.8 million people in total – said they had received financial help from their parents.

While family can be an important source of support, the authors caution that many families do not have enough savings to support themselves through the crisis, let alone help relatives.

Young people (aged 18-24) and low-income people are also most likely to have coped with rising cost pressures by simply not paying at all. Almost one-in-five (19 per cent) adults in low-income families reported falling behind on at least one bill in the past three months – an action with longer term consequences as arrears rise and credit ratings fall.

Worryingly, the authors find that many people have had to turn to other, more last-resort coping mechanisms in recent months.

Around one-in-seven (16 per cent, 1.7 million in total) adults in low-income families ate less or skipped meals for seven days in the past month – twice as much as the population as a whole (8 per cent) – while around 500,000 people (6 per cent) reported using a food or warm bank in the last four weeks.

Finally, the report finds that the cost-of-living crisis has worsened people’s physical and mental health too. Two-in-five (40 per cent) young people aged 25-34 (3.6 million individuals) said that their health had been negatively affected by the rising cost-of-living, as well as 30 per cent across all age groups.

The coping mechanisms poorer and younger people are most likely to rely on are particularly associated with poor mental health. Those falling behind on at least two bills are three times as likely to report poor mental health as those that haven’t (38 per cent vs 13 per cent).

Similarly, almost half (45 per cent) of those who were severely food insecure reported poor mental health, compared to just one-in-twelve (8 per cent) who haven’t experienced any food insecurity.

Molly Broome, Economist at the Resolution Foundation, said:

“Almost everyone has been affected by the ongoing cost-of-living crisis, but different people have used different coping mechanisms to get by, with older and richer people least affected.

“Over one-in-three middle-aged people have turned to credit cards, overdrafts or other further loans to cope with rising cost pressures.

“Young people have been most likely to look to friends and families. This can be a real lifeline if support is available, but whether your friends or family can offer support when they are struggling themselves is a lottery.

“Many poorer households have had to turn to more extreme measures, with around 500,000 people visiting a food or warm bank over the past month.

“The cost-of-living crisis isn’t just causing financial distress – it’s worsening peoples’ physical and mental health too, especially if they’ve fallen behind on bills or been unable to eat regularly. While the crisis should start to ease soon, its consequences will stay with us for some time.”

Dave Finch, Assistant Director at the Health Foundation, said:

“These results confirm that the cost of living crisis is having an irrefutable impact on the UK’s health. With high prices set to continue and incomes unlikely to rise to meet them, this grim picture is unlikely to change soon.

“The direct health risks of not affording essentials and the emotional distress of precarious financial situations has led 3-in-10 people to report their health had been negatively affected by the rising cost of living, rising to two-fifths of young people aged 25-34. Around one in seven (16 per cent) adults in low-income families ate less or skipped meals for seven days in the past month.

“Immediate action through cost of living payments has helped, but many still rely on food and warm banks. Longer-term risks to the UK’s physical and mental health created by growing financial insecurity and debt must also be addressed with a strategy to prevent a rise in unaffordable problem debt and evictions.”