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It’s getting harder for low-income families to save and own their own homes.
If you’re struggling to save, you’re definitely not alone. A new report from Aviva shows that one in four families have less than £95 in savings. The report also sheds light on the fact that homeownership is falling amongst the poorest families in the country.
How much are people saving?
Low income families had less than £95 of savings and investments to call their own this winter. This is down from £136 in the same period last year. When the report looked at high income families, the figure jumped massively to £62,885, which again includes investments and is up from £50,208 in the previous year.
These findings not only show that poorer families are finding it harder to save, but that the gap between the rich and poor is widening at the same time.
It seems that more families are worrying about the rise in the general cost of living – 43% said inflation was a threat to their standard of living – this figure has gone up from 36% last summer.
What’s happening with home ownership?
Overall, home ownership hit its lowest level in four years, with 64% of families living in their own home. Unsurprisingly, low-income families were the least likely to own their own home – only 41% of low earning families were home-owners, compared to 90% of high earning families. The fall in home ownership amongst low-income families could be down to the fact that they are finding it hard to save for the deposit necessary or because they are not qualifying for the best mortgage deals.
What is classed as low-income?
In this study, families that brought in less than £1,500 a month into their households after tax, were classed as low-income. If a family brought in more than £5,001 after tax, they were classed as high earners. Altogether, one in four families in the UK are classed as low-income.
What should you do if you’re on a low income?
It’s understandable that some families are worried about the rising cost of living and the difficulty of saving, particularly for something as big as a house. So what should you do if you’re in this situation? Well, there are ways you can maximise your income and savings and put yourself in a stronger financial position.
First of all, make sure your household is receiving all the money it’s entitled to. This involves visiting the Government’s website and checking your eligibility for benefits. Claiming something like housing benefit, or income support could make all the difference to how well you cope financially month to month.
If money is tight, it’s very important to put a strong budget together.
Your budget will show you how much money is coming into your household and how much is going out. It should also show you how much you’re able to spend on each area of your life. Sticking to a detailed, accurate budget should help you keep track of your money and make sure you don’t overspend in any one area. A good budget should also help you avoid having to rely on credit to get by month to month. For more ideas on how to boost your income, read our previous blog.
If your finances are under pressure because of debt repayments, there’s help out there. You can get in touch with one of our expert debt advisors using the options at the top of the page.
by Christine WalshBack to blog home