Families’ spending cut to bare essentials

Indebted families are reducing their spending and cutting out luxuries in a bid to stay afloat, a major study by Aviva has revealed.

The typical monthly income of an average family has reportedly fallen by 1.7 per cent in three months – from £2,018 in August to £1,983 now.

On average, family debt amounts to £10,604 – which is almost 50 per cent of the typical yearly income of £23,796.

According to the report, 52 per cent of UK families have unsecured debts, whether they be loans, credit cards or overdrafts, and the further falls in income put increasing pressure on households’ ability to make ends meet.

Families are spending around nine per cent of their monthly income on paying off their debts (not including housing) which almost equals the ten per cent of income spent on food.

The main households affected are those in a relationship with one child, whose monthly income has, on average, fallen to £2,196 from £2,327.

The only cohabitees who have not been affected by this fall are those in a relationship without children, whose income has, in fact, risen by eight per cent.

The director of workplace savings at Aviva, Paul Goodwin, said: “Incomes have only risen by £46 since January so to make ends meet, we have found that UK families are cutting out luxuries, economising on spending and reducing the typical amount they save.”

As a result of wage stagnation and rising costs, families are cutting out their spending on all but the essentials, highlighted by the fact that one fifth of families are no longer going out for dinner or buying takeaways.

Furthermore, the amount of families who are surviving on less than £1,250 a month has risen by one per cent since August, and now stands at 30 per cent.

Categories; Current UK Economy, Young Family Finances,