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

Saving and Making Money

Updated on 24 November 2011 | 9 Comments

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

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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