Families Struggle To Break-Even Each Month

  • A quarter of Brits (23%) – potentially 11 million – are just about breaking even at the end of the month, leaving nothing left for emergencies
  • A further 7% find themselves in the red, using overdrafts (37%), savings (28%) and credit cards (23%) to plug the gap
  • To make ends meet, two in five (39%) have cut down on essentials – 28% have cut back on food and 19% are spending less on fuel
  • Brits have borrowed an average of £1,950 on top of any mortgage costs this year – but just one in four (26%) have paid it all back
  • On top of cutting essential spend, more than a fifth (22%) now take a packed lunch to work, 16% are flogging their belongings in return for hard cash, while 13% have taken on extra work to boost their income

 

Consumers are walking a tightrope with their finances, according to new research by uSwitch.com, the independent price comparison and switching service. Nearly a quarter (23%) just ‘break-even’ at the end of every month, leaving no contingency money for unforeseen emergencies such as a rise in bills, a boiler breakdown or a hike in fares.

A further 7% of consumers actually spend more than they earn, relying on overdrafts (37%), savings (28%) and credit cards (23%) to plug the gap.

Overall, more than a third of Brits (39%) are struggling to make ends meet and have been forced to cut back on everyday essentials. Almost three in ten (28%) are spending less on food and a fifth (19%) have reduced their fuel consumption. Things were set to get better in 2012 – but 14% of consumers say that they are worse off now than they were 12 months ago

Even for the lucky few (26%) who have managed to avoid cutting back this year, there is little to celebrate. Rising food costs, energy price hikes and fuel and rail fare hikes just around the corner January mean that very few are likely to escape the squeeze. In fact, three-quarters (75%) of consumers are entering the festive season worried about their financial situation.

For the one in three (34%) who have suffered a pay freeze over the last 12 months, and the further 8% who have actually had their pay cut, balancing the books has been even tougher this year.

To make ends meet, consumers have borrowed an average of £1,950 on top of their mortgages – but only a quarter (26%) have managed to pay it all back[3]. As well as cutting back on essentials, in a bid to boost finances, more than a fifth (22%) have started taking a packed lunch to work, 16% have resorted to flogging their belongings in return for hard cash, while 13% have taken on extra work to boost their income.

 

INFOGRAPHIC:   What consumers are cutting back on to make ends meet

Tightrope Britain Infographic
Tightrope Britain Infographic

Michael Ossei, personal finance expert at uSwitch.com says: “When it comes to balancing the books, we are treading a fine line. It will only take an unexpected price hike or emergency at home to push us over the edge and into the debt spiral.

“For many consumers, everything is shooting up except their income. Unprecedented hikes in essential bills such as food and energy are forming an increasingly large hole in people’s pockets. The shock increase in the consumer price index in November will do nothing to help the situation. We are facing a winter of discontent.

“With one in four struggling to repay debt from last year, it’s vital that people look for the best ways to save money. Assess your household bills to check that you are not paying over the odds for your home essentials. If you do need to borrow money, take time to look at the best loan and credit card deals on the market. It might seem like a good idea to take the first deal that comes along, but the chances are you’ll end up regretting it and paying more over the long term.”

Author:

I’m Mary Cummings, a ghostwriter, collaborator and all round word doctor. I help business owners write and publish business books; I'm also passionate about helping creative freelancers find work that they love - their work sweet spot with work on their terms, projects they love and clients who are a dream to work for.

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