UK households are feeling the strain of an uncertain financial environment, with estimated wealth falling by nearly a fifth over the past year, according to St. James’s Place.
The firm’s Financial Health Report, carried out among 6,000 individuals across the UK, found estimated average household wealth has fallen by 17.5% over the past year, dropping from £126,482 in 2025 to £104,329 in 2026.
The decline is reflected in how people view their financial situation, with more than twice as many (34%) saying their finances have worsened over the past 12 months than improved (17%).
St. James’s Place said everyday financial confidence is also decreasing, with just over a third (37%) now describing themselves as financially comfortable, down from 42% last year, while a fifth (21%) say they are struggling financially, up from 16%.
The rising cost of living remains the main driver behind the shift, with seven in 10 (69%) citing this as the primary reason their finances have worsened over the past year. Other factors include a lack of salary increase (19%), higher rent (13%) and increased tax bills (8%).
However, the research uncovered big differences in outcomes depending on how people manage their finances. Households with a plan in place to manage their money are consistently in a stronger position, both holding more wealth and feeling more financially confident.
On average, households with a financial plan say they have £157,416 in wealth, compared with £70,610 for those without. This advantage is seen across every income level. Among households earning under £20,000 a year, those with a financial plan are around £24,500 better off on average than those without. At the other end of the spectrum, the gap rises to nearly £200,000 for those earning over £80,000.
St. James’s Place said the benefits extend beyond wealth, with 72% noting that having a financial plan makes them feel more confident about their financial position and 76% stating they feel financially resilient and able to cope with unexpected changes, compared to 52% of those without a plan.
Despite this, fewer than four in 10 (38%) people have a financial plan in place.
Alexandra Loydon, group advice director at St. James’s Place, said: “Many households are feeling worse off, with living costs and heightened global uncertainty weighing on confidence and, understandably, affecting how people feel about their finances and the future.
“What our research shows, however, is that while these pressures are widely felt, the outcomes people experience can be influenced by their attitudes to money management. Those who take a more structured approach to managing their money are better placed to build wealth, feel more confident and stay resilient, regardless of their income or circumstances. Despite this, the number of people with a financial plan has not increased over our five-year research period.
“At a time when so much feels outside of our control, it becomes even more important to focus on the things we can influence. Having a clear plan for your money, and taking small, consistent steps to manage it, can make a meaningful difference.”
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