One in 10 living beyond their means
According to financial comparison website Uswitch, UK spending continues to spiral out of control as 4.8 million adults spend more than their income on a monthly basis.
Uswitch research established that a further 20% have no spare money left at the end of the month while the average person has £157 left in their bank account when all other bills have been paid.
Around 50% of those spending more than they earn are relying on overdrafts and credit cards.
Uswitch said average debt repayments rocketed from £174 in 1997 to £356 in 2007 – a rise of 104%. Furthermore, the amount of credit cards issued has nearly doubled from 36 million to 71 million.
Many reports published late last year said higher debts could push a record number of people into insolvency this year.
Accountancy firm Grant Thornton predicts that 28,000 people would declare themselves insolvent in the first quarter of 2008 with the total eventually reaching 120,000 for the whole of 2008.
The research showed that spending on non-essential items has increased 65% over the last 10 years, outpacing growth in both average net earnings, and essential living costs, which rose by 48% and 43% respectively over the same period.
Ann Robinson of Uswitch said Britain is suffering from a bad case of affluenza, it is evident that our earnings can’t keep up with our ‘Hello’ lifestyles. With the credit squeeze having an impact, consumers need to start paying serious attention to their spending habits.