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Cost of living rises as families need £25k to break even

Simon Ward
by Lovemoney Staff Simon Ward on 24 November 2011  |  Comments 9 comments

The average family is seeing its spending power diminished while needing £24,600 just to pay for life's essentials.

Cost of living rises as families need £25k to break even

Two new surveys have highlighted the cost of living in ‘Austerity Britain’.

Asda’s latest Income Tracker for October claims we’re £13 a week worse off than we were a year ago.

Meanwhile, a report by Skipton Financial Services says the average family with two children needs to earn £24,600 a year just to break even.

What it all costs

Skipton calculated the cost of everyday essentials as follows:

  • mortgage or rent (£4,730 a year)
  • running a car (£3,400.76)
  • commuting costs (£2,455.44)
  • utility bills (£1,282)
  • council tax (£1,217)
  • food, toiletries and other household essentials (£4,950.20)
  • life and home insurance (£801.36)
  • clothes (£666.12)
  • landline, broadband and mobile phone (£525.24)
  • home maintenance (£566.06)

The report also found that the average family was spending £3,131.64 a year paying off loans and credit cards and £476.28 on digital TV subscriptions.

And this is before any spending on going out, holidays or luxury items.

Family spending power decreases

The Asda Income Tracker says the average family now has £164 of weekly disposable income, 7.1% less than at this time last year. It calculates that gas prices have gone up by 24.1% in the past year, with electricity prices rising by 14.9%.

Meanwhile, the cost of unleaded petrol has risen by 14.3% over the last 12 months, with diesel increasing by 15.1%.

There are plenty of ways that you can cut your household's outgoings each month. By shopping around for a new deal on your broadband, phone or TV deal then you can save a small fortune, while there are simple ways to save money on the road, and reduce your living costs generally.

And if you want to cut back your credit card and loan repayments, take a look at our Comparison centre

More: The cheapest loan is a credit card | Get the best rate on your remortgage

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Comments (9)

  • Starchild
    Love rating 5
    Starchild said

    That rent/mortgage can't be right. That's just £394 per month. Surely for most families it's closer to double that.

    On the other hand, commuting and running a car (I would just lump this together and call it Travel costs) comes to a whopping £488 per month. If I knew I had to pay that a month I'd walk everywhere - even if it meant my clothing bill would go up by having to spend more of it on shoes.

    Report on 24 November 2011  |  Love thisLove  0 loves
  • CuNNaXXa
    Love rating 362
    CuNNaXXa said

    There are plenty of ways that you can cut your household's outgoings each month. By shopping around for a new deal on your broadband, phone or TV deal then you can save a small fortune,

    To be brutally honest, if someone is close to the edge, you wouldn't be negotiating for a cheaper broadband, phone or TV deal. You would be cancelling them. Of course, there are those who would prefer to starve to death than miss a premiership game on Sky Sports 1, or give up their Apple 4S, or be disconnect from the WWW.

    Then again, some people cannot manage their priorities. Unfortunately for us, the worst offenders are actually our own MPs, who cannot say NO to anything, and spend money they just don't have.

    I once knew a couple who managed to pull in the purse strings when he lost his job. They were able to survive on just her salary until he could find another job, and her salary wasn't THAT much either. Just working class people who can tighten the belt when it is needed.

    Everyone can economise if it is needed. It just takes a little bit of will power. And if things get desperate, there are avenues that are open for those that NEED help.

    Report on 24 November 2011  |  Love thisLove  0 loves
  • nickpike
    Love rating 270
    nickpike said

    Makes me wonder how pensioners manage.

    Report on 25 November 2011  |  Love thisLove  0 loves
  • ACTed
    Love rating 4
    ACTed said

    Wow! Please tell me how I can rent or get a mortgage for only £400/month!

    Report on 25 November 2011  |  Love thisLove  0 loves
  • Chuckwallah
    Love rating 23
    Chuckwallah said

    I don't have a mortgage or rent to pay, I use Freeview, I don't have a car and I commute by bike. I've spent the past year and a half "shopping around", economising and generally reducing costs wherever possible, but the increases in electricity, gas and food prices over that same period have simply wiped out all my gains.

    Report on 25 November 2011  |  Love thisLove  0 loves
  • Basia02a
    Love rating 43
    Basia02a said

    ACTed pay down your mortgage. Live somewhere cheaper and smaller - mine is 20p an month, though I am at the end of my working life

    Report on 25 November 2011  |  Love thisLove  0 loves
  • jedi44
    Love rating 31
    jedi44 said

    Slightly off-topic. Sorry, but why have I not neen able to "Love" any comments for some days now. Either nobody else has felt the urge or I'm not the only one.

    Report on 25 November 2011  |  Love thisLove  0 loves
  • Moocher
    Love rating 7
    Moocher said

    Its because when you try to love, the website returns an 'oops - an error has occurred'

    Report on 26 November 2011  |  Love thisLove  0 loves
  • electricblue
    Love rating 643
    electricblue said

    Statistically this article may be correct as an average, but there is no such thing as an average family, so looking closer it is complete tosh. I also wish authors would stop peddling figures based on living costs in the South of England. My rent for a very large terrace house is only £280 a month ( it would be £400 but I've been in it a few years) and the remaining mortgage on the property I still jointly own with my ex is around £400 a month. Typical council rents in East Yorkshire are £300-£350 a month. Commuting costs shown are also absurd for the typical working family and extrapolating from RAC or AA motoring costs also bear no relation to what are the true 'essential costs' of motoring.

    Report on 04 December 2011  |  Love thisLove  0 loves

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