The number of households who are struggling to balance the books has climbed by more than a quarter of a million year-on-year, according to the latest figures.
Legal & General’s latest ‘MoneyMood’ survey reveals that an increasing number of households don’t have the level of income needed to pay off their bills, with the number of households in this category rising from 2.1 million in July 2013 to 2.4 million in 2014.
Further figures from the research also showed that the average shortfall for struggling households comes in at £60 per month.
This figure is, however, a 30% fall on the figure of £85 recorded in July 2013. This downward trend continued in a similar fashion across a number of UK regions. This is as follows:
- London: down from £111 to £56
- South East: down from £104 to £78
- South West: down from £301 to £113
- Wales: down from £46 to £42
Household income growth still not in line with economic growth
While the gulf between income and bills is narrowing in many regions, the fact that it exists at all may be a sign that economic growth is continuing to outpace wage growth according to John Pollock, Chief Executive Officer, Legal & General Assurance Society. He said:
“Despite the recent upturn in the UK economy, our MoneyMood survey shows we are not yet seeing an upturn in household finances with more homes worse off this year compared to July 2013. The number of homes who are struggling to make ends meet has risen significantly year on year. In July 2014, a quarter of a million more homes are struggling to avoid sinking into debt than at the same time in 2013. Perhaps a clear sign that household income growth continues to lag behind economic growth.”
A payment method that could help to balance budgets
One option that could potentially help households manage their budgets a great deal more effectively is a prepaid card. As card holders can only spend what is actually on the card, this helps hugely in terms of keeping spending in check.
While a prepaid card can be topped up at anytime online, using a prepaid card as a main payment method removes the possibility of slipping into an overdraft.
In addition, as no credit check is needed to obtain a prepaid card, even those who have struggled with debt in the past will be able to access a prepaid card for essential and occasional expenditure.