Article date: 12 August 2015
- The typical family’s monthly income reaches a three-year high of £2,126
- But at least one in ten survives on less than half this amount as the gap between family types widens
- Monthly savings habits reach a record high as rainy day funds increase
- But 26% of families are still not saving and average debts have also risen – leaving many unprotected against unforeseen events
Rising incomes and savings pots among UK families are masking a widening gap between the ‘haves’ and ‘have nots’, the latest Aviva Family Finance Report reveals.
The last six months have seen the typical family’s income reach its highest point since March 2012. Better savings habits also mean the typical family is saving a record £113 each month.
But despite these improvements, the income gap between family types has widened and many families are not managing to save each month, leaving them vulnerable to financial shocks – particularly as debts have also increased.
Parents raising children alone are left behind by income gains
The typical family’s monthly income after tax reached a three-year high of £2,126 in May, the highest figure recorded since March 2012 (£2,139).
However, the upward trend masks a widening gap between the ‘haves’ and the ‘have nots’. Couples with plans to have children have made the greatest gains since November 2014 and have seen their monthly incomes rise by £339 from £2,122 to £2,461. This is more than twice the boost enjoyed by any other family type.
In contrast, parents who are raising children alone – either as single parents or as a result of being divorced, separated or widowed – have seen their monthly incomes drop from £1,176 to £1,077 over the same period. This loss of £99 a month adds up to £1,188 annually, the equivalent of one month’s salary.
This group has also seen the gap widen between their income and that of the typical family from £866 to £1,049, over the last six months.
Table 1: Income gap for family types compared to the median family income
|Winter 2014||Summer 2015|
|Median family net income (monthly)||£2,043||£2,126|
|Couples with no plans to have children||+£107||+£95|
|Couples with plans to have children||+£79||+£334|
|Couples with one child||-£27||-£24|
|Couples with two or more children||+£130||+£67|
|Parents raising children alone*||-£866||-£1,049|
*This group combines single parents and those raising at least one child having been divorced, separated or widowed.
Aviva’s data shows while the proportion of families taking home at least £2,500 a month has risen from 39% to 43% in the last six months, the percentage taking home £1,000 or less has stayed consistent at 10%. This means at least one in ten families are still surviving on less than half of the typical family’s income.
Savers act to grow their pots – but many families aren’t putting money away
Savings trends also highlight the differing fortunes of UK families. Rising incomes mean the typical family is saving more and putting aside a record £113 a month, compared with £99 in November 2014. The typical savings pot is now £3,116.
However, more than a quarter of families (26%) are saving nothing each month, and the percentage with no savings cushion has remained static at 17% over the last six months.
It suggests that, while those families who can afford to save are making efforts to put more money away, the situation has shown little sign of improving for those who were already struggling or failing to do so.
Table 2: Those who can, are saving more; but many are still not saving
|Winter 2014||Summer 2015|
|Typical monthly savings across all families||£99||£113|
|Percentage saving nothing each month||£27||£26|
|Percentage with no savings put away||£17||£17|
The typical family has used its income gains to increase monthly debt repayments over the last six months, from £197 in November to £225. But the average balance owed has also risen by 5% from £9,050 to £9,520, suggesting that some families are relying more heavily on borrowing to supplement their incomes.
Louise Colley, managing director, protection at Aviva, comments:
“This summer’s Family Finances Report brings great news for some British families, but also rings alarm bells for others. Overall, the typical family has got more money in its budget and is using it to save more and reduce their financial vulnerability.
“However, we must not overlook the growing number of families in danger of being left behind by this resurgence. In particular, single parents face a challenge to maintain their standards of living on lower incomes and it is no wonder that many families are still finding it a struggle to put money away each month.
“It is also a concern to see rising levels of debt that are requiring families to make ever-increasing monthly repayments. With this in mind, it’s important to highlight and address the fragile footing of some British families so they are not left exposed if their circumstances should change.”
Download the full Aviva Family Finances Report PDF (4.4MB)
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*According to the English Housing Survey (2013/14), there are 12,689,000 households across the 16-54 age brackets.
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Notes to editors
The Family Finances Report is designed and produced by Aviva in consultation with ICM Research. The 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
Unless otherwise specified, data was sourced from the Aviva Family Index which used findings from over 26,000 people who are members of one of the six groups of families identified above via ICM research. 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. Due to a change in research methodology, some median values from previous reports have been re-calibrated in this edition to allow direct comparisons with previous years. This edition also includes analysis using figures from Aviva’s own customer database.
• A median is described as the numeric value separating the upper half of a sample, a population, or a probability distribution, from the lower half. Thus for this report, the median is the person who is the utter middle of a sample. All figures in this release are medians unless otherwise specified and are referred to as ‘typical’ rather than ‘average’ (mean).
• A mean is a single value that is meant to typify a list of values. This is derived by adding all the values on a list together and then dividing by the number of items on said list. This can be skewed by particularly high or low values.
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