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Household bills are increasing twice as fast as salaries
A new study by Santander has found that the cost of household bills have increased twice as fast as salaries over the past decade. Basic household bills including council tax, energy bills, water and TV, have increased by around 43% on average over the last decade which is greater than the increase in average wages (19.2%) and inflation (32.3%) in the last decade.
Gas and electricity bills have increased the most by 73% and 72% respectively whilst water bills have risen by 41%, council tax has risen by 27% and TV and broadband costs have risen by 24%. The study also found that on average UK adults spend 13% of their salary on their household bills which means the average Briton will spend around £525,000 on basic household bills over their lifetime.
Matt Hall, head of banking and unsecured credit at Santander, commented on the findings of the study; “Households have been hit hard as the cost of bills and other goods continue to rise. With increased prices across a variety of key household items, families will be looking for ways to make their money go further.”
This comes at the same time as new data from the Office for National Statistics (ONS) which shows mounting financial pressure in the first three months of 2017 pushing households into the grip of the most prolonged squeeze on their living standards since the mid-70’s economic crisis.
Rising prices and stagnant or falling wage growth has seen less being put aside by households for a rainy day with latest research suggesting only 1.7% of disposable income is being saved. As savings drop, borrowing in May increased hitting £1.7bn, £300m more than expected.
Although borrowing is going up, spending in shops and car/property transactions have started to fall spelling bad news for businesses and sparking a warning from the Bank of England regarding the rising level of consumer debt.
General secretary of the TUC, Frances O’Grady, spoke to The Guardian regarding these latest figures from the ONS; “These figures make for grim reading. People raiding their piggy banks is bad news for working people and the economy. But with wages falling as living costs rise, many families are having to run down their savings or rely on credit cards and loans to get through the month.”
As household bills rise, the amount we are saving falls and the amount borrowed goes up so how do you keep your household finances on track? Here are our five tips to help you get your finances back in the black:
- Budget – Make a household budget which lists what money you have coming into the house and what you have leaving on a monthly basis. This way you’ll be able to see if you are paying out more than you earn, any areas where you can save money and exactly where your money goes every month.
- Switch providers – After making your budget if you think you are paying too much for your energy, phone, TV or insurance bills then get comparing and switch providers. It’s easier than ever to switch and you’ll be surprised at how much you could save. Every little helps so cutting a bill by just £20 a month means you are better off in the long run.
- Pay down debts – Whether you have credit cards, personal loans, car finance or a mortgage ensuring you meet the minimum payment every month is vital. For unsecured debts, such as credit cards and loans, paying them down as quickly as possible will limit the amount you pay back in interest and removes the financial burden from you.
- Set up a direct debit for savings – Saving can be difficult particularly when money is tight but setting up a direct debit from your account into a savings account can help. Whether or not you are saving for something specific, saving even a small amount from your monthly salary adds up. Using a direct debit means you are less likely to miss the money and you won’t forget about adding to your savings each month.
- Cut back on purchases – Cutting out unnecessary purchases, such as clothes and eating out, and cutting back on everyday purchases, such as food bills, can help you to save money which can be put towards bills, paying off debts or adding to your savings account.