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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

Average Brit borrowing more, saving less

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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6 comments so far. Why not have your say?

Tongue of Fire

Aug 22, 2012 at 17:07

There no longer seems to be any concern for saving for the future: "Saint Peter don't you call me 'coz I can't go, I owe my soul to the Chancellor's goals"....?.

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Lost my marbles

Aug 22, 2012 at 17:56

Those relying on property to get them out the mire may well have a nasty shock ahead of them.Property prices are still way over the level they should be.

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Jeremy Bosk

Aug 22, 2012 at 19:13

Average incomes are meaningless because of the extreme inequality. £1250 a month is unheard of luxury for many households while others are rolling in it. The soon to arrive minimum income guarantee for pensioners will be £140 a week or £606.66 a month. The sick and the unemployed often do worse.

From October the legal minimum wage for those aged 21 or over will be £6.19 an hour. On a forty hour week and 50 week year (many work fewer hours than this) the monthly wage is £1031.66. A 35 hour week reduces that to £902.70.

Given the cost of housing, commuting, utilities, council tax etcetera, saving is next to impossible for many.

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snoekie

Aug 22, 2012 at 20:03

Jeremy, with regard to the average pension, the £140 per week is only for those born after 1951. All current pensioners will continue on their existing pension rates.

Talking about discrimination, particularly age discrimination, this is a prime example of the Glibdems hypocrisy and duplicity, and throwing their insignificant weight around so they have something to lie about. Not that the Tories are innocent. Both are guilty of screwing the middle range and above pensioners, bigger tax bills, in life and death (particularly those with SIPPS) if they dare have the audacity to survive beyond 75.

This fact needs to be screamed from the rooftops because they are boasting of what they have/are doing for pensioners. Clearly they are hoing for dementia to set in for many so they can lie about what they have(n't) done for (present) pensioners.

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Jeremy Bosk

Aug 22, 2012 at 20:45

Snoekie

Your point is well made. Having been born in 1949, I will take it to heart :-(

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Roger Savage

Aug 22, 2012 at 23:40

It's hardly surprising - borrowing is encourgaged with low interest rates and saving is discouraged with, er, low interest rates...

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