Skipton

Breaking Even- average family needs to earn nearly £25k

15th November, 2012 in Finance, Lifestyle

The average British family now needs to bring home £24,801.51 a year – just to break even, research has revealed. The figure is an increase of £129.35 on last year’s cost of living, which came in at an already staggering £24,672.16.

The study of 2,000 adults shows families are forking out an extra £215.28 a year on petrol, and an additional £216.32 commuting to work.

But there is some good news- the report indicates many families have been able to consolidate their debt since 2011, with loan payments going down by £98.28, and credit card payments reducing by £127.20.

A study of 2,000 adults considers the money families need to fork out on essential expenditure such as mortgage or rent payments, utilities, insurance, food shopping and motoring.

It also includes the costs of dressing the family, owning a mobile phone and landline, travelling to and from work and maintaining a property.

Andrew Barker, Managing Director of Skipton Financial Services, the mutually-owned financial adviser which conducted the research, said:

“The worrying thing is that the report doesn’t include any luxuries whatsoever, the figures only refer to the money people need to survive.

“So we haven’t allowed for any sort of disposable income, which means unplanned shopping trips, takeaways, restaurants meals, entertainment at the weekends and holidays are all added extras.

“It is easy to understand why the large majority of Brits are so cash strapped, as their average wage needs to be significant to cope with their annual costs.

“And while there has been some change in spending habits this year compared to last, families are still paying out almost as much money on the food shopping as they are on their mortgage payments.

“Don’t forget that £24,801.51 is the figure UK families need to bring home so, once income tax and national insurance has been taken into account, a basic rate taxpayer would actually have to earn well over £30,000.”

The study indicates that while mortgage payments have gone down by £215.16 a year for most families, they are still burning the biggest hole in pockets, totalling £4,514.88 a year.

The weekly food shop is the second biggest financial commitment for Brits, which eats £4,491.24 annually – an increase of £33.28 over the past 12 months.

Other payments which have gone up over the past year include home insurance which has risen from £431.40 to £442.56, and mobile phone bills which have gone up from £368.52 to £395.40.

The most noticeable reductions in payments are for loan and credit cards, but other bills which have reduced slightly include council tax which has gone down by £39 a year and car insurance which has gone down by £12.60.

Outgoings which have changed the least over the past 12 months are gas bills which have gone down by just 44 pence, water bills which have decreased by 60 pence and roadside assistance which has gone up by six pence.

But the rise in the cost of living hasn’t gone unnoticed – with seven in 10 Brits admitting they’re fully aware of the hike in their outgoings.

Depressingly, six in 10 people believe they’ll end up paying out even more money on bills next year, despite having less disposable income than ever before.

Unsurprisingly then, more than half of British families are feeling the pinch, finding themselves cash-strapped most months.

Andrew Barker continued:

“When we first carried out this research in 2011 we knew that people were feeling the pinch, with inflation riding high at 5% and savings accounts paying rock-bottom rates.  However even we were surprised that families needed to bring home almost £25,000 just to stand still.

“Unfortunately, despite inflation now nearer to the Government’s 2% target, many families are still in exactly the same position as a year ago, with almost 60% saying they have less disposable income than last year.

“Given this it is maybe not surprising, but nevertheless still worrying, that a third of respondents say they do not have a savings account and, of those that do, only one in five are managing to save more each month than last year.

“It seems that there is no end in sight for many families, with only one in 10 expecting to be less cash strapped in 2013 than in 2012.”

AVERAGE UK FAMILY’S ANNUAL COSTS

2011 2012 2011 vs. 2012
Quarterly gas bill £462.04 £461.60 -£0.44
Quarterly electricity bill £474.96 £476.24 £1,28
Quarterly water bill £345.68 £345.08 -£0.60
Weekly food shop £4,457.96 £4,491.24 £33.28
Monthly clothes spend £666.12 £680.40 £14.28
Toiletries/staple items £492.24 £508.20 £15.96
Fitting out house £486.70 £483.10 -£3.60
House maintenance £79.36 £92.32 £12.96
Commuting to work £2,455.44 £2,671.76 £216.32
Mobile phone bill £368.52 £395.40 £26.88
Internet £281.52 £285.48 £3.96
Landline £243.72 £243.96 £0.24
Council tax £1,217.16 £1,178.16 -£39.00
Car tax £126.76 £122.05 -£4.71
Car insurance £769.80 £757.20 -£12.60
Petrol £2,452.32 £2,667.60 £215.28
Roadside assistance £51.88 £51.94 £0.06
TV/Sky/cable £576.94 £653.58 £76.64
Mortgage £4,730.04 £4,514.88 -£215.16
Life insurance £369.96 £372.60 £2.64
Home insurance £431.40 £442.56 £11.16
Paying off loans £1,434.36 £1,336.08 -£98.28
Paying off credit cards £1,697.28 £1,570.08 -£127.20
TOTAL
£24,672.16
£24,801.51 £129.35

 

© Bialasiewicz | Stock Free Images &Dreamstime Stock Photos

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