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Average Brit borrowing more, saving less
Latest Family Finances report from Aviva shows the average Brit is worried about losing their job and is struggling to save and pay off debt.
by Michelle McGagh on Aug 22, 2012 at 00:01
The typical Brit is saving less and borrowing more despite fears that a prolonged recession could see them lose their job.
The most recent Aviva Family Finances report reveals an increase in mortgage debt, unsecured debt and a fall in savings for the typical family, with middle-class families also contending with a decline in earnings.
The report, which is published every three months to track the state of the nation’s finances, shows the number of households surviving on less that £1,250 a month has declined but that the number of more well-off families have also seen a decline in their earnings. The number of families who have an income of more than £2,500 per month has fallen from 36% in August 2011 to 31% this year.
Britain has seen an improvement in unemployment figures but salaries at the mid to upper end of the scale have not improved.
The typical monthly expenditure of a UK family is now £1,765, a 5% increase on the £1,680 recorded in May. Although inflation has fallen this year, some of the main expenses for families have increased such as energy bills and clothing.
Families are still finding money for luxuries, with 54% saving an average of £158 per month towards a holiday.
Louise Colley, head of protection sales and marketing for Aviva, said despite a fall in inflation from 2.8% to 2.6% between May and July, families were still struggling.
‘While inflation highlights how costs have changed, each family manages their money in a different ways…However, irrespective of how we look at it, things have become more expensive and families are more stretched.’
Can’t save, won’t save
With finances so tight it is no surprise that savings pots have fallen in the past three months from £1,228 in May to £1,131 in August, although they are still higher than August last year when the average family had £982 squirrelled away.
The typical amount saved on a monthly basis is just £29, less than the £34 people were saving last August, and far below the £45 people were spending in May 2012.
‘This clearly shows that the rising cost of living has had an impact on how much people are able to save – but has not curtailed families’ savings habits completely. Indeed, despite the impact of inflation, the number of people saving nothing each month has only risen slightly from 36% (August 2011) to 37% (August 2012),’ said the report.
After the basic bank or building society savings accounts, the next most popular ways to save are into an individual savings account (ISA) and then premium bonds – 36% and 17% of people respectively have these products.
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