High Debt Levels Overshadow Rise In Incomes
Despite a rise in monthly incomes, debt levels remain high in Britain as the average family owes nearly £10,000, a new study has found.
Average debts fell in the last quarter to £9,314, down from more than £10,000 in January, but that still remained 58% higher compared to a year ago, according to a report by insurers Aviva.
The report blames inflation and a squeeze on household budgets, with credit card loans and overdrafts accounting for most of the debt.
However, household incomes have risen slightly; a typical family now earns £2,150 a month after taxes and before paying bills, which is a 4% rise on last year.
As a result, families have managed to boost savings and put away around £45 each month, which is a record high since the report began in January 2011 and 41% more than a year ago.
This means that a typical family saves £1,228 per year, which represents a 6% year-on-year increase.
Much of the income boost was driven by families with two parents and children.
But in sharp contrast, single parents' incomes have plummeted by 8% over the last year - with government reforms to the benefits system partly to blame.
Richard Kelsall, head of savings for Aviva, said: "Many UK families have experienced tough times in recent years, so it's reassuring to see that people are getting to grips with their finances to weather the storm.
"Incomes have risen and debts are falling which suggests that families are working hard to get on an even keel."
Despite economic woes, families are planning to spend more than £100 per household this summer celebrating the Diamond Jubilee and the Olympics and Paralympics, according to the Money Advice Service.
Around £3bn will be spent by 23 million households this summer as people either go to watch an event live, celebrate it at home with family and friends or attend a street party.
The average spend on Jubilee events will be £112 per household and those celebrating the Olympics and Paralympics will spend around £208, it estimated.
Four in 10 are likely to spend more money than usual this summer, while 15% said they will push the boat out and spend "a lot more".
Sarah Smith, behaviour expert at the service, said: "2012 looks set to be an unforgettable summer, from the Jubilee and the London 2012, to everything in between from day trips and holidays to exciting sporting events."
But she warned: "It's troubling to hear so many people are unaware of their summer spending.
"Costs can rack up, so it's important to get a grip and avoid unexpected expense."
what do you think?
The Government says inflation is falling, but in fact prices on everything we buy are increasing. They say that wages are increasing but only a few are rising by 2%. The pasta tax is still at 20% which is stupid. VAT in the rest of Europe has gone down to a maximum of 12% so why doesn`t ours. The reason is because Osborne is giving more overeseas aid than the whole of Europe and wants to increase it. Civil servants will have 2 months away from their offices and MPs have another 15 day holiday now. MPs have 6 weeks at Easter, 4 weeks now 10 weeks in summer, 4 weeks at Christmas so they have 6 months holiday. and like Civil servants they only work 4 days a week and all of them get MASSIVE pensions even though over say 100 years they pay in 2p.
An amazingly unintelligent response.
112 quid for this jubilee rubbish 208 for the olympics ,what planet do they live on.We are just about able to pay the utility bills no savings and if i had 300 quid spare i would put it towards a holiday for my family .More clueless comments from so called expert money forcasters.Ridiculous.