Two recent reports have shown how many people are struggling in these financially difficult times.
Research from National Savings & Investments (NS&I) shows that over six million people have no savings. A separate report from the Joseph Rowntree Foundation has found that the minimum income needed to be earned by parents to give their family an acceptable standard of living has risen over the past year.
The NS&I survey found that people were saving on average 8% of their monthly income, which equated to around £100 per month, interestingly men are saving more than women.
The survey found that most people do not set goals when saving with paying for a holiday being prioritised over building up an emergency fund. This has resulted in more than a third of people having insufficient savings to cope in a financial emergency.
The younger generation though seem to be more willing to save with 40% of 16 – 25 year olds setting themselves savings goals, compared to only 25% of those aged 35 – 44.
Younger people are also more optimistic about their ability to save in the future. Almost half of 16 – 24 year olds say they are more likely to save in months to come whereas only 14% of 35 – 44 year olds will be able to put money aside in savings.
Financial pressures seem to be at the heart of the problem with 25% of people predicting that they will be less able to save over the next three months.
According to the latest report from the Joseph Rowntree Foundation the minimum income each parent must earn to give their family an acceptable standard of living has risen to £18,400 in 2011; an increase of 5% from 2010.
The increase has been put down to the current financial climate and rising prices at a time when we have seen cuts to childcare assistance and family allowance and a freeze on child benefit.
The report also found that a single person needed £15,000 a year to provide an acceptable standard of living.
The report, which can be read in full here, says “In practice, earnings have risen by less than inflation, meaning that many people on low incomes are finding it substantially harder to make ends meet than a year ago.”
It continued, “This report is an early sign of the huge impact that even seemingly modest changes in the welfare system can have, especially for low-income working families who depend on it to achieve an acceptable living standard.”
In a response to the report a spokesperson for HM Treasury said, “The Government recognises that people are feeling squeezed and is doing what it can to help, reducing fuel duty so taxes on fuel are 6p lower than they would have been and implementing an increase in the personal allowance in April, taking over 800,000 of the lowest paid out of tax.”