Nearly half (44%) of the British population struggle to cope financially, and the same number of people expect their finances to worsen over the next six months.
Credit card, overdraft and mortgage repayments are the biggest concerns, according to research from insolvency trade body R3.
The study reveals that four million people are worried about becoming redundant, and 11 million are saving less than normal.
Struggling Brits are feeling the pinch as inflation rises, and the possibility of an interest rate rise could be the final straw for many homeowners, with a massive 81% admitting they would struggle if their mortgage payments increased by £100 a month.
The future is no brighter
The result from the survey, conducted in the last quarter of 2010, show an increase of 13% in people thinking their finances will get worse and 6% more are worried about their current levels of debt compared with the previous survey carried out in the third quarter of 2010.
Younger generations are particularly concerned, with 57% of those aged 25-34 worried about debt levels. With unemployment, currently at 2.5 million, particularly hitting younger people, this result is hardly surprising.
Steven Law, president of R3, says since the survey was last carried out, there have been increases in the cost of living from the VAT hike and fuel and utility costs. This has happened against a backdrop of pay freezes, cuts and redundancies and it's understandable most people feel pessimistic about their finances.
"In these uncertain times, for many of those of working age there is a real fear that if they do suddenly lose their job they will struggle to keep up with their debt repayments," he adds.