To date, UK research into household income, spending and money management strategies has focussed on particular subgroups of low- and moderate-income (LMI) households, for example those with long-term health conditions and the financially excluded. These approaches have relied on labour-intensive manual data collection. We are not aware of a study to date that builds an in-depth, broader view of UK LMI households’ financial lives, or any similar study around the world with such a comprehensive approach to data collection.

We have initial funding from the Aviva Foundation for a ‘minimum viable’ version of an innovative approach. This is a highly valuable step towards developing a rounded understanding of financial uncertainty. However, there is much more we can learn if additional funding can be secured. We believe there are several ways to extend the existing project, to broaden its reach and increase its impact.

The lived experience of income and expense volatility

There is a significant evidence gap on within-year earnings and income volatility in the UK. While bridging the gaps in evidence on income volatility is in itself of critical importance, our view is that building a holistic picture of volatility, looking at income and expense volatility side-by-side at the household level, is vital to understanding how financial resilience can be supported, through both policy and market solutions.

Household roles and dynamics

Not enough is understood about how different adults within a household manage their money, for example, the extent to which this is done individually or collaboratively and why, or the opportunities and challenges created for individuals and households by different strategies. We also want to understand the influence of gender in household money management and how different resources are used and accounted for. Our approach allows us to bring together one view of the household’s inflows and outflows and to explore the household dynamics around financial management and decision making.

How those experiences evolve over time and in relation to household events

Our aspiration is to run the project over multiple years. This will enable a much richer picture of how household events, such as changes in employment or working patterns, or who lives in the household, as well as external factors such as economic context and policy changes, impact on financial wellbeing and on how households respond to those events.

Co-designing of tools, products and messages

Nest Insight’s focus is on better understanding the challenges people face in order to identify and test real-world solutions. The exploration of household strategies and unmet needs through the Real accounts project will enable the team to gain in-depth insights into the needs of low- to moderate-income households today and work with them to understand the policy and market solutions that may be needed in this space.

Our existing funding will allow us to design, pilot and prototype the research approach and to track income and expenditure in detail at a household level for up to 50 households for six months, and this research project is already in development. Our immediate need is for funding that that will allow us to extend the project by six months to enable us to look at variation by calendar month over a full year, including the impact of events like school summer holidays, tax year end and the festive end-of-year period. This is a unique opportunity to capture data for at least one full year, and given that the time-intensive set-up will already have been completed, the cost of extending is relatively low: £20,000 per month. Ideally, we would extend the project over multiple years to enable a longitudinal study, but in the first instance a six-month extension would significantly increase our learnings and the impact we can have. That extension would mean that fieldwork would run from June 2023 to June 2024, instead of to December 2023. Our goal is to have this funding in place by July 2023.

Expanding the sample

This would boost the coverage of different household circumstances and demographics across a broader geographic spread.

Enabling deep dives on particular characteristics or demographics

Additional funding would allow us to boost the broad general sample with additional targeted sub-group samples in a way that would enable the examination of specific research questions relevant to particular groups, such as households with certain ethnic, cultural or religious characteristics, people living with disabilities, including mental health conditions, and people working in particular sectors or in particular work patterns.

Adding additional research questions

Our existing resources will allow us to broadly explore how households experience volatility and the coping mechanisms they adopt. The rich dataset we will build will also lend itself to further analysis and additional qualitative research around it. We could, for example, look at the impact of events such as energy price rises or changes to state benefits; at particular areas of household finances such as debt; or, in more detail, at household money management dynamics, the role of informal and formal support networks, or the impact of different kinds of employment and caring responsibilities.

Investing in the creation of infrastructure, toolkits and sharing of best practice

We aspire to be able to make the dataset available to other researchers in the UK Data Service after the end of the project, and we are open to approaches before then if researchers have different perspectives or questions they want to explore. We also want to find ways to evaluate our approach and explore how to scale and share with the research community.

Co-designing tools, messages and services with LMI households and trialling activity

Our project lays a strong research foundation for potential future project extensions to create and test interventions designed to improve financial wellbeing, working collaboratively with participating households as well as industry and policymakers.

Boosting our convening, disseminating and engaging capacity

Additional funding will allow us to maximise our impact through a dedicated project website, briefing papers, blogposts, social media and events with policymakers, thought leaders and industry.

We are actively seeking additional funding partners who can bring their own ideas and resources to this innovative project and help to amplify and create impact with our learnings.

If you’d like to know more about how you can get involved, please get in touch with the team: realaccounts@nestcorporation.org.uk.

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