The average British household needs £1,496 more each month, after tax, to feel financially secure, according to a survey by uSwitch.com, a price comparison website.
By polling people on the costs of their housing, food, travel, additional expenses and so on, the website came up with a figure of £4,000 of after tax income each month for a household to cover all of its debts and still be putting aside enough money each month to feel financially safe. However, the same survey revealed that most households were only bringing in £2,504, meaning that each household needs an additional £1,496 every month to feel truly financially secure.
The problem has arisen because living costs have gone up far faster then wages. Energy, petrol and food are the big ones, which each increasing and taking a larger and larger chunk of household budgets.
Michael Ossei, uSwitch’s personal finance expert, spells out the problem: “Years of pay freezes and the rising cost of living have hit consumers hard and led to a financial nightmare where they are now almost £1,500 a month short of the household income they need to be secure […] it’s unlikely that things will get better quickly – with few people expecting pay rises, the majority of homes are unlikely to see any rise in their monthly income, let alone the sort of increase they feel they need.”
So it seems that we can expect these problems to continue into the future, and that many households will simply have to cut back on their spending or abandon their hopes of achieving what they believe is financial security.
However, some good news has come from the survey. Over a third of people defined financial security as being free from debt, which may be an attitude they carry with them out of the current economic down turn. If that is the case, we may end up with a much healthier financial landscape when all this is over.
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