Context
MAS research in 2015 had identified three core UK consumer groups: Struggling, Squeezed and Cushioned. The Squeezed group has a reasonable income and some savings but depend on credit and are unprepared for financial shocks. The segment is in turn made up of Squeezed Younger Adults, Squeezed Younger Families and Couples, and Older Squeezed. As a whole, this segment lacks financial resilience and may be disengaged from finances and advice.
The study
MAS commissioned the study to be better able to support the segment. They particularly wanted to understand sub-segments’ financial behaviour and attitudes, why many fail to improve their money management, and to better understand individual motivations and aspirations. The ethnographic study undertook 15 2.5 hour depth interviews in December 2015. Participants also kept a diary of relevant events in the week before and after the interview. There were 4 interviews in London, 3 in Birmingham, 2 in Cardiff, 3 in Glasgow and 3 in Belfast.
Key findings
The Squeezed (generally)
- Tactical rather than strategic with money, and often financially stuck. They tend to monitor rather than to budget. They are generally motivated and self-reliant.
- Tend to have debt and little or no savings, leading to structural problems whose effect on their lives they don’t see.
- Tend to be in work, although younger parents may be reliant on benefits to supplement their income.
- They may have financial blind spots, such as long-term debt and spending as a reward for or relief from financial concerns.
- They need guidance on overcoming financial problems but are often hard to reach as they believe they have effective approaches to money management.
Squeezed Younger Adults
- Usually single or single parents who live in private rented accommodation and work full-time.
- Those with jobs with a clear career path with likely promotion prospects tend to be more confident about their future, even if their pay is low. Those in jobs with fewer prospects feel more stuck.
- Apart from those with children, they tend to live for the present and spend accordingly – they enjoy their independence. They have little interest in planning for the long term.
- They may believe that they have good money management habits, but they are at risk of problem debt. Many turn to payday loans, ignoring long-term consequences.
Squeezed Younger Families and Children
- Most people in this segment have dependant children, who take up their time and money. Both partners (or single parents) usually work, although many mothers work part-time. Many depend on benefits, whether working or not.
- It can take time for families to adjust to the new financial constraints, including reducing spending. They may begin to feel the effects of existing debt while taking on yet more.
- This may thus be the most “stuck” sub-segment. They often need to spend more on housing. The extra expenses may be compounded by poor credit ratings. Other enjoyable spending may be out of reach, so people in this sub-segment may need to save for them or do without.
Older Squeezed
- People in this group may feel that their financial burdens are starting to ease. They may have bought a home and are nearing the end of their mortgage, and the costs of supporting children tend to ease – although the latter may need further support to set up home. They have also potentially overcome other long-term debt.
- Having more cash left over, many in this sub-segment may feel an urge to spend but face a false sense of security. Their earlier expenses may mean that they have limited pensions built up, or they may lack emergency savings for unexpected costs.
Points to consider
Methodological limitations:
- Although the study provides rich findings, the sample is nevertheless small and fail to uncover differences within sub-segments.
Generalisability/ transferability:
- Provides richness to earlier quantitative findings.
- May be enriched through further, similar exercises.
