Families draw the line at austerity Britain

Article date: 30 May 2012

  • 76% of families admit there are certain cutbackInfographic of family finances in the UKs they can’t or won’t make
  • The typical UK family could afford to save an extra £53 a month
  • But 33% of families claim they have already cut spending to the bone

A third (33%) of UK families can’t afford to put any more money aside for a rainy day because every penny is allocated. This figure rises to a staggering 65% of single parent families. These findings are revealed in Aviva’s latest Family Finances Report* released today.

Of the two thirds of families (67%) who believe they could afford to save something extra each month, the typical ‘affordable amount’ is £53 a month (£636 annually).

Rejecting austerity
However, there’s strong evidence that many families will prioritise spending on certain ‘must haves’, rather than thinking about saving. Three quarters (76%) of families admit there are things they would refuse to give up, even if doing so meant they could save more. These ‘non-negotiables’ include items such as summer holidays (17%), not turning down the heating (14%), and cable / satellite TV (12%).                         

Encouragingly, life insurance and payments into pensions were the third most popular things people wouldn’t cut out (see full tables in notes to editors**).

When looking at what people would be prepared to sacrifice in order to boost their savings, families were more likely to cut back on food costs by stopping regular take-away meals (26%), or buying basic ranges in the supermarket (25%).

Interestingly, people are less likely to give up ‘little and often’ luxuries such as take-away coffees (6%) and breakfast (4%) on the way to work. But a quick calculation shows cutting out a £1.99 coffee every working day would save £477.60 over a year.         

However, the research also shows that saving is not top of families’ priority lists. While most families admit they could put something extra aside, their savings experience tends to be more ‘as and when’ rather than a conscious part of their regular financial planning.

Only one in five (19%) families set aside a specific amount each month. It is far more common for families to save sporadically – for example following a windfall – or by putting away any spare cash at the end of the month. One in eight families (12%) admit to using a penny jar or piggy bank.

Notably, the families who save automatically by Direct Debit say they don’t even notice the money going out of their accounts.

Richard Kelsall, head of savings for Aviva, says: “It’s clear from our research that families are making tough decisions about their spending, which unfortunately means saving can become less of a priority. However, our research shows that most families are trying to save and it’s encouraging that two thirds say they could afford to put more money aside each month.

“It’s understandable that people are swayed towards using cash for more immediate and exciting things like holidays, rather than putting it into savings. But families also report that ‘unexpected costs’ are one of their biggest money worries, so it’s important they weigh up where their priorities lie. By getting into the savings habit, families can help secure their financial futures, while building a buffer means they’re less likely to turn to the credit card when unexpected bills come in.”

Aviva’s Family Finances Report also found:

  • 37% of families say they are saving for a rainy day.
  • 16% save into financial products such as bonds and shares.
  • The number of families who say they save nothing on a monthly basis has fallen to a record low (24% vs 28% in May 2011).
  • Men believe they could put aside twice as much as women on a monthly basis (£78 for men vs £36 for women).

Download the Aviva Family Finances report - issue six (PDF 2MB)

* The Aviva Family Finances report is an in-depth study into the financial needs of the 84% of the UK population who live as part of a modern family. Based on customer profiles and Government data Aviva has recognised the six most common types of modern family as:
–    Living in a committed relationship with no plans to have children
–    Living in a committed relationship with plans to have children
–    Living in a committed relationship with one child
–    Living in a committed relationship with two or more children
–    Divorced/separated/widowed with one or more child
–    Single parent raising one or more child alone

** Top 10 things families wouldn’t give up at any cost:
1.    Pets (30%)
2.    Summer holiday (17%)
3.    Paying into pension (14%)
4.    Life insurance / CI cover (14%)
5.    Not putting heating on (14%)
6.    Cable / Satellite TV (12%)
7.    Using the car (10%)
8.    Days out with family (9%)
9.    Children’s birthday presents (9%)
10.  Buying branded ranges at the supermarket (8%)

Top 10 cutbacks families would make if money became tight:
1.    Not having summer holiday (30%)
2.    Giving up weekly takeaways (26%)
3.    Buying basics ranges (25%)
4.    Not putting heating on (23%)
5.    Not drinking alcohol during the week (22%)
6.    Giving up satellite / cable TV (20%)
7.    Cutting back on family days out (20%)
8.    Using the car less (17%)
9.    Less expensive presents for children (13%)
10.    Stopping going to the cinema (10%)

Data was sourced from the Aviva Family Index which used findings from over 12,000 people who are members of one of the six groups of families identified above via OpinionMatters. This report is a definitive look at the personal finances of families in the UK. Not only does it look at personal wealth, income sources and expenditure patterns but also tracks how these change across the different types of family unit.

In addition to the regular data, each quarter a spotlight will be shone onto a different relevant topic. This issue has a focus on how families prioritise their finances in relation to savings.


If you are a journalist and would like further information, please contact:

Sarah Poulter : Aviva Press Office : 01904 452828 : 07800 691569 : sarah.poulter@aviva.co.uk

Lee Blackwell / Ben Marquand / Emma Beresford : The Wriglesworth Consultancy : 020 7427 1400 : aviva@wriglesworth.com

Notes to editors:

Aviva provides insurance, savings and investment products to 43 million customers worldwide.
We are the UK’s largest insurer with over 14 million customers and one of Europe’s leading providers of life and general insurance. We combine strong life insurance, general insurance and asset management businesses under one powerful brand. We are committed to serving our customers well in order to build a stronger, sustainable business, which makes a positive contribution to society, and for which our people are proud to work.
We are ranked as one of the UK’s top ten most valuable brands and Aviva Plc are in the top 10% of socially responsible companies globally in the Dow Jones Sustainability World Index.  In 2011 we invested £5.3 million into our communities in the UK, which included 34% of Aviva employees volunteering nearly 33,000 hours for good causes.
Aviva is working in partnership with Railway Children through the Aviva Street to School programme to get children living or working on UK streets back into everyday life. Find out more at www.aviva.co.uk/street-to-school.
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