Rising costs hammer low-income households

02/07/2009

Around 25 per cent of Britons are so poor that they cannot even afford a minimum standard of living, the Joseph Rowntree Foundation said yesterday.

According to the organisation's latest report, the typical family with two children needs an income of £27,600 a year in order to live comfortably.

However, budgets have been put under pressure over the past year by the cost of essential items rising by between seven and 12 per cent.

In turn, these cost increases were found to be hitting the poorest the hardest.

Donald Hirsch, the report's co-author, said: "In tough economic times, a growing number of people will ask themselves whether they have enough income to afford a minimum acceptable standard of living. Many fall out of work.

"More find it hard to make ends meet. In such circumstances, a benchmark like the minimum income standard for Britain can help society to keep sight of what levels of income it finds unacceptable."

"It is a major concern that with the average income being around £23,000, that the average level of unsecured debt for a household using credit is approximately £21,500," EuroDebt director Kevin Still added.

"There is a strong implication most households would struggle to make ends meet without any unsecured credit repayments. Add minimum payments of two to three per cent to this and it adds a burden of £400-£600 per month and reduces disposable income to a minimal level. This is a fundamental reason why Debt Management Plans are becoming more popular, to provide a structured way of getting household budgets back in line with what can be reasonably afforded without walking away from the commitment to repay lenders the money they owe."

Tags; Budgeting Advice, Young Family Finances,

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