Currently 11% of the adult population of the UK, or 5.4m adults, spend more than they earn each month, according to new data on the savings market released this week*.
This is an increase of 12% in overspending since 2008, when 4.8m adults were living beyond their means in the same survey.
A further 13m UK adults only break even at the end of the month, leaving them with no disposable income or possibility of saving, while 26m adults have less than £100 left over, after paying their bills.
Half of those needing extra cash to make ends meet used a bank overdraft, while a third used credit card borrowings.
With wage increases currently averaging just 1.9%, and inflation at 3.5%, the real value of the average household’s wage packet is in decline, making the situation worse, rather than better. Petrol prices, now reaching an all-time high of £1.20 per litre, will further reduce the spending power of the average household.
As a result, survey organiser uSwitch concluded that “despite reports that the economy is on the mend, 15m believe that they will be worse off this year than last.”
Separate data relating to pensioners revealed this week that, of those pension holders who released equity from their home during 2009, one in five had credit card owings averaging £9,000.
This included ‘plastic’ debts of £8,881 for the age bracket 65 to 69, rising to £9,048 for those over 70. The information was gathered from an analysis of 3,501 equity release plans taken out in 2009, according to the equity release company Key Retirement Solutions.
*Survey price comparison website uSwitch
