borofree reveals the devastating mental-health impact of the hidden Covid financial crisis
- 46% of UK adults struggling to pay or budget for outgoings have admitted that it has caused them periods of depression
- Over 1 in 10 (12%) UK adults have contemplated suicide or self-harm as a result of not being able to make ends meet
- 19% of young people (18-34) have contemplated suicide or self-harm as they have been among the hardest hit financially by the pandemic
Money worries during lockdown have triggered a mental health emergency, with 46% of UK adults who have struggled to pay or budget for outgoings admitting that it has caused them periods of depression, and over 1 in 10 (12%) having contemplated suicide or self-harm as a result of not being able to make ends meet. Alarmingly, that figure rises to 19% for young people (18-34) who have been among the hardest hit financially by the pandemic.
These are the findings from a report commissioned by borofree, a new UK salary advance start-up that helps people avoid debt, by providing free access to a proportion of their next pay cheque in advance. The research, which was conducted by YouGov, has also uncovered that more than half (52%) of those struggling financially over the past year have suffered with insomnia or sleep problems, and almost 1 in 4 (38%) have experienced panic attacks or anxiety.
Financial hardship in lockdown:
The majority of the UK, particularly those in work or protected by the government’s furlough scheme, have been insulated from the worst of the financial impact caused by the pandemic in the last 12-months, but borofree’s research highlights a significant minority are enduring a hidden Covid financial crisis.
Over a fifth (23%) of UK adults have been unable to afford or pay for outgoings, including food and clothing and mortgage, rent and utility bills at some point during the pandemic. A similar proportion (19%) have seen a fall in their income during the last 12-months, rising to over a third (35%) for those in part-time work. Around 1 in 10 (9%) of households with children have had to forgo buying birthday and Christmas presents in the last year.
The impact has not only been on mental health with, 22% of UK adults with financial struggles seeing their relationship with their partner damaged and 37% feeling like they have lost control.
Jasmine Birtles, money expert and founder of MoneyMagpie is working with borofree on the launch of its salary advance service, comments: “Hearing just how many people are suffering emotionally from money worries during the pandemic, is heart-breaking and shocking but sadly not surprising. While many of us have been preoccupied with the trials and tribulations of home-working and home-schooling, too many people have been struggling just to survive. The full extent of a mostly hidden Covid financial crisis is only now beginning to come out into the open. Too often this distress comes from not being able to see a way out of a financial blackhole. However, there is help available, and both government and the financial services sector need to do better to signpost support and advice or too many people will remain trapped inside a financial lockdown.”
Minck Hermans, CEO and Co-founder at borofree, comments: “borofree’s research has illuminated a mostly unseen financial crisis that is pushing too many, too far and impacting our self-esteem, our ability to work and our relationships with the people we love. We simply cannot stand by and allow a public health emergency to give way to a mental health emergency, caused by financial distress.
For too long, working people have been dragged down by the domino effect of bad debt meaning bad credit, meaning worse terms. We want borofree to help reset our relationship with money and overcome a financial system that is not on the consumer’s side. We need hard-working adults to be able get financial support in a way that’s responsible and that delivers what they need, when they need it. With our pioneering approach to salary-advance, we’re breaking that cycle with no credit checks, no credit score impact, no interest-bearing debt.”
Preparing for a rainy day
While the pandemic could not be predicted, a large section of the British public was particularly susceptible to an economic shock, with over 1 in 10 (12%) of all UK adults coming into the pandemic with no savings, with those aged 35-54 the least likely (17%) to have any money saved for a rainy day.
As a result, nearly a quarter (23%) of UK adults have borrowed money during the last 12 months, rising to nearly a third (30%) for 35-44 year olds.
This contrasts with the financially fortunate who have managed to save during the pandemic, taking the amount saved per adult to an average of £3,794, or around £198bn nationally, according to the research.
Buy now, pay later
While many have turned to traditional sources of credit, Buy Now, Pay Later (BNPL) has also emerged as a new option to spread the cost of payments, being used by over a fifth of UK adults (22%) and a third (34%) of young people aged 25-34.
However, while most BNPL services are advertised as interest-free payments over three months, over 16% of 18-34 year olds admit that they have ended-up using BNPL to pay for purchases over a longer period with interest added.
In a further sign that the dangers of being lured into overspending and incurring interest through BNPL are becoming clearer, borofree’s research also finds that 20% of BNPL customers believe that BNPL should be “more honest and responsible about their services and that they can lead to debt”.
Jasmine Birtles comments: “It’s not ideal to have to borrow money to get to the end of the month, but as patron of a debt charity and a fair loans charity I know that people can get desperate for cash at certain times, often due to circumstances beyond their control. That desperation will drive them to high-cost credit or seemingly easy credit like Buy Now, Pay Later which can get them into difficulties later on. I am much happier about working people being able to access their own money early, with no charges and no interest, as is being offered by borofree. For those in work, free salary-advances should obviate the need for high-cost credit and will help people take back control of their own money.”
Minck Hermans comments: “Too many of us can find ourselves sleep-walking into debt, whether it’s through the lure of interest-free credit card offers or seemingly risk-free ways to buy like Buy Now, Pay Later, seducing us to spend money we don’t have on things we don’t really need. Consumers have been crying out for a bit of imagination from the UK financial services industry to help them when money is tight in the short-term, without being made to pay through the nose for the privilege or end up saddled with long-term high-interest debt. borofree has finally answered this call, with a responsible new way to to access your own money, with no charges and no-interest ever. For those in work, free salary-advance should sound the death knell for exploitative pay day loan companies and help people take back control of their own money.”
Avoiding the high-interest debt trap
borofree is the first totally free, salary-advance service for UK consumers, launching today to support people who need help with urgent or emergency spending and prevent them falling into a debt trap through turning to sources of short-term credit that usually comes with high-interest rates attached.
borofree allows those in work to access up to £300 of their salary in advance, with zero interest and zero charges. The UK start-up has partnered with over 50 large retailers and brands including John Lewis, Tesco, Asda and Amazon to provide salary advance through retail gift cards that can be accessed through its app and redeemed in-store or online. Repayment of the salary advance amount then happens automatically when users next get paid, with employers also able to join the borofree platform at zero cost to them.
The UK fintech trialled successfully in the UK under the Karma brand, after graduating from the Financial Conduct Authority’s sandbox programme, which tests innovative new financial products in a secure regulatory framework.
Minck Hermans comments: “Even without having a pandemic to contend with, life is always unpredictable, whether its dealing with flat tyre, a parking ticket or a sneaky leak. When these unexpected moments happen, our options are limited: many of us turn to payday loans, resulting in uncomfortable conversations, inflated interest rates and unfair charges. With salary-advance from borofree we have created a way that people can quickly and responsible get early access to their own money, without having to turn to pay day loan companies charging interest at up to 1,500% and being caught up in a debt-spiral.”
borofree is open to all adults who are in work and have a valid payroll number and where their employer has also signed-up to use the borofree platform.
To find out more visit: https://www.borofree.com/
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