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."