An analysis of the relationship between deprivation and financial wellbeing

We already know that health outcomes are worse for people living in more deprived areas. This applies to both physical and mental health, and is why NHS England is focusing effort on the 20% most deprived areas in its Core20Plus5 programme. These links can also be found in other social dimensions, for example education.

We wanted to know if this also applies to financial wellbeing. Many services are delivered locally. As such, understanding the impact of local areas can help local authorities, the third sector and other players in the financial wellbeing sector to design and target services more effectively.

The analysis looked at the relationship between financial wellbeing and how deprived a local area is.

The analysis was done by Aston University’s Centre for Personal Financial Wellbeing (CPFW)Opens in a new window. It used data from MaPS’ Adult Financial Wellbeing Survey 2021 – a nationally representative survey of 10,306 adults in the UK. 

We measured financial wellbeing using nine questions from MaPS’ Adult Financial Wellbeing Survey. These cover keeping up with bills, saving, credit, retirement planning, unexpected bills, income loss, satisfaction with finances and confidence managing money.

We measured deprivation using government measures of local area deprivation. These measure how deprived a small area is based on things like: income, employment, education and skills, health, crime, housing and the living environment. 

The four nations of the UK measure deprivation in different ways. So we looked separately at each of EnglandOpens in a new window, Northern IrelandOpens in a new window, ScotlandOpens in a new window and WalesOpens in a new window.

Financial wellbeing varies with local area deprivation in a similar way to physical and mental health and other broader measures of wellbeing.

• Low financial wellbeing is most common in the most deprived neighbourhoods. This supports the case for specific services for these areas.
• Low financial wellbeing is also present in less deprived areas. This suggests services are needed in all areas.
• The most deprived areas also had the biggest variations in financial wellbeing. This suggests that within the most deprived areas, services need to reflect individuals’ circumstances.

The research findings suggest value in embedding money guidance as part of more holistic services, and that there are opportunities to develop partnerships across different domains of public services, such as combined health and money guidance. MaPS’ Money Guiders programme supports organisations in doing this. 

People in more deprived areas had lower levels of financial wellbeing than those in less deprived areas.

This begs the question: isn’t this just about income? In other words, are we just picking up the fact that more affluent people will tend to live in less deprived areas?

We know income is always an important driver of financial wellbeing.

But, even when we accounted for income, we still found people in more deprived areas had lower financial wellbeing. 

MaPS plans to use this research as part of a forthcoming review into the UK Strategy for Financial Wellbeing, and to inform discussions about the future direction of the UK Strategy. We will also share this research with our four national forums, where stakeholders across the UK discuss and inform the progress of the UK Strategy.