Families need £27,373 to "break even"

The Momentum UK Team 18 December 2013

A new study has found that the cost of living for a family with two children has increased by 10% since last year.

The research looked at the cost of essential items like food, utilities, insurance, transport and loans, and found that average annual family spending has increased from £24,801.51 to £27,373.20.

The study found that families are spending more than they did in 2012 on food shopping, their commute to work and paying off debts. The weekly food shop was the biggest expense, coming in at £5,077.28 a year. This is an increase of 13% since last year, up to an average of almost £100 per week.

At £4,723.92, payments on mortgages and rent were the second biggest expense for families. Housing costs were up by 5% on last year, up to an average of £400. Families spent £3,313.68 paying off consumer debt, such as credit cards, loans and store cards, and also spent more than last year on things like internet, insurance and mobile phones.

The only category to show a slight decrease in spending levels was TV, cable and sky - payments towards these services were down by £5.40 per year.

Andrew barker, managing director for Skipton Financial Services, said:

“This year’s research shows there has been no respite for British families over the year with the average family spending 10% more than this time last year, meaning they are having to bring home over £27,000 just to break even.

“This report doesn’t include any disposable income, which means unplanned shopping trips, takeaways, restaurants meals, entertainment at the weekends and holidays are all added extras.

“It is easy to understand why the large majority of Brits are so cash strapped, as their average wage needs to be significant to cope with their annual costs.

“Over the past year, living costs have continued to rise above the average rate of pay with many public sector workers, for example NHS staff, having a pay freeze.

He added:

“Don’t forget that £27,373.20 is the figure UK families need to bring home so, once income tax and national insurance has been taken into account, a basic rate taxpayer would actually have to earn over £36,000.”