Growing family incomes disguise widening gap and slender savings buffer

Article date: 28 December 2013

  • Gap between highest and lowest earning families grows 14% in the last three years
  • More families have some form of savings – but margins for comfort get smaller
  • Families sacrifice luxury items for winter and look beyond Isas for better returns

UK families are divided by a growing income gap despite their typical incomes reaching a three year high, the latest Aviva Family Finances Report reveals today.

The report, which tracks the financial circumstances of different UK family types, also shows that while more families than ever have savings, an increasing number have less than a month’s salary to fall back on, as fears grow over the rising cost of living.

Income gap widens as overall picture improves

The typical monthly income of UK families has reached a record high of £2,166 in December 2013 – the highest figure since this report series began in 2011.  Family incomes have risen consistently in the last 18 months and by 12% since January 2011 when the typical family took home £1,937 a month.

Couples with one child have gained the most over the last three years and have seen their monthly incomes grow by 18% (£357) to £2,321 in December 2013. Their gains are in stark contrast to divorced, separated or widowed parents who have seen their monthly incomes fall by 14% over the same period to £1,189.

These varying fortunes mean that while the overall picture has improved, UK families are now separated by a bigger income gap than in January 2011. Three years ago the difference between average monthly incomes of the highest and lowest earning family types was £1,281. That figure has since grown by 14% to £1,459 in December 2013.

Income gap widens among
UK families

Monthly income

Monthly income vs. typical UK family

Jan 2011

Dec 2013

Jan 2011

Dec 2013

Couples with no plans to have children





Couples with plans to have children





Couples with one child





Couples with two or more children





Single with one or more children





Divorced/separated/widowed with one or more children





Most families with savings since January 2011

Reassuringly, a record number of UK families now have some form of savings to fall back on. Just one in five (20%) have no savings in December 2013, compared with more than one in four (28%) back in January 2013 and one in three (33%) in January 2011.

However, the cost of living appears to have worn away at family savings over the last year. December 2013 sees 30% of UK families with less than £500 put away, compared to 14% in January 2013. The percentage with less than £2,000 to fall back on has also jumped from 28% to 40% between January and December.

As a result, UK families are increasingly troubled by the threat of rising living costs. Almost two thirds (65%) of families cite a significant rise in basic living costs as a major concern over the next three months – up by nine percentage points from 56% in January. More than half (57%) are worried about the threat of unexpected expenses – up by 14 percentage points from 43% in January.

Families rein in spending while savings accounts fall out of favour

Cutting their monthly expenses is a common step among families to preserve their income. The second half of 2013 has seen 6% of families sacrifice their monthly spending on holidays; 5% fewer are spending on leisure goods each month; 4% have scrubbed clothing and footwear from their regular outgoings; and 3% have cancelled a satellite TV subscription.

Low rates on savings accounts have prompted those who are in a position to save or invest their money to look elsewhere for better returns over the last year. More families are investing in premium bonds in December 2013 (21%, compared with 17% in January 2013) as well as stocks and shares (17%, compared with 13% in January).

In contrast, the uptake of Isas among UK families has dropped by two percentage points in the last six months alone – from 41% in July to 39% in December.

Louise Colley, protection distribution director for Aviva says:

“The cost of living is uppermost in many people’s minds this winter. Growing incomes mean some families will be starting the new year in a better financial position than they have become accustomed to in the last three years. But sadly the widening gap between the ‘haves’ and ‘have-nots’ means this cheery outlook will not be shared by all.

“Taking steps to save for the future and protect the family income can make all the difference if costs increase or unexpected bills land. It is great news that more people have some form of savings they can turn to, but many people’s savings pots are little more than a one-off emergency fund. On the whole, family savings are not built to withstand long term pressure on living costs.

“Seeking ways of getting the best return from any spare income can help to ease the pressure on family budgets. Taking further steps wherever possible to protect their income from an unexpected turn of events can also prove to be a wise investment.”            

Download the Family Finances Report PDF (0.93 MB)

Watch the video

Download the infographic PDF (0.1 MB)

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


Data was sourced from the Aviva Family Finances Report series which used findings from over 20,000 people who are members of one of the six groups of families identified above via Canadean 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.

In addition to the regular data, in each edition a spotlight will be shone onto a different relevant topic. This issue has a focus on how experience and children from past relationships impacts on family finances.

- Ends -

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

Sarah Poulter : Aviva Press Office : 01904 452828 : 07800 691569 :
Andy Lane / Rachel Morrod / Sinead Meckin : The Wriglesworth Consultancy : 020 7427 1400 :

Notes to editors:

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