Debt soars for UK families

| January 26, 2012 | 0 Comments
Debt soars for UK families

The rising cost of essentials such as fuel and food has contributed to a 48 per cent increase in the level of personal debt, according to the latest Aviva Family Finances Report.

The average British family now owes around £7,944 in unsecured borrowing, compared with £5,360 a year ago, despite a 7 per cent increase in a typical family’s monthly net income to £2,066 over the past year.

To make matters worse, income has fallen for some groups, with divorced, separated and widowed parents suffering a 22% drop in income between January 2011 and January 2012.

Aviva’s research also highlighted a substantial decline in families’ ability to save, with the number of families saving nothing each month increasing to 42% over the past year.

Many of those families still managing to save have cut down, with the average amount saved by households each month falling from £22 in January 2011 to £21 this year.

Despite pressure on incomes from inflation and unemployment, households’ average spending has ‘remained steady’.

Insurance group LV= has also published a new study today which suggests the cost of raising a child to the age of 21 has increased by 3.3% to £218,000 in the past year.

The cost of education and childcare account for biggest outlay, with education expenses such as uniforms and university tuition fees rising 5.1% in the past year to £71,780, which childcare has increased by 2.7% to £62,099.

Not surprisingly, given that university tuition fees have soared to up to £9,000, young people aged 18 to 21 are the most expensive group, with costs rising by 5 per cent to as much as £17,459 a year.

LV=’s report suggests that many parents are reducing their spending by buying cheaper food and second-hand goods, as well as selling unwanted items to raise cash.

Tags: Aviva Family Finances Report, cost of raising a child, , family income, university tuition fees

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