Almost 7 million adults living beyond their means
Almost 7 million UK adults (14%) are living well beyond their means by spending more than they earn to fund their lifestyle, a new survey by Bright Grey has found. The research from the protection specialist reveals an alarming disregard to personal income, with an additional 4.9 million (10%) adults stating they do not have a clue how much they actually spend each month in relation to their earnings.
The 'Salary Gap' study, which looks at expenditure against income for adults in the UK, shows that the average adult needs £1,706 (net income) per month to live a comfortable life - 27% more than the current average monthly wage. On an annual basis this means the average Briton is falling £4,320 short of their ideal salary to support their lifestyle.
Despite the shortfall in the average earnings and having to endure a recession, eight out of 10 (82%) people have not altered their spending in the last 12 months and an additional 6% say they have actually increased their spending.
And it isn't just bank accounts that are hit by overspending. Almost a third of people (29%) say that their spending sometimes puts a strain on the household finances. An additional 3.9 million adults (8%) admit their spending has put their household's finances into debt.
Placing a household into debt comes as a result of millions of adults having to rely on credit to fund their lifestyle. A fifth (20%) use credit such as credit cards and loans to fund their lifestyle and 16% say they use a bank overdraft.
The most common reason for overspending is ‘just because I have to' (30%), however 21% say they enjoy their lifestyle too much to give it up. A further 15% say they are simply hopeless with money and 11% admit they use credit to keep up with high-earning friends.
Roger Edwards, proposition director at Bright Grey said: "Even in an Age of Austerity the public's spending shows no sign of waning, as the average UK adult continues to spend beyond their means and rack up debt. Worryingly, this is mainly due to the average salary being far short of that needed to lead a comfortable life and those who just can't help but spend either to fund their lifestyle or just to make ends meet. Whilst Bright Grey is not suggesting people change their lifestyle or spending habits, we do urge consumers to be aware of their finances so they can enjoy their lifestyle without having to worry about going into the red.
"Whether it is recording your incomings and outgoings on a scrap bit of paper, holding a family AGM to discuss finances or purchasing a protection product to make sure you are secure if you were to lose your income, simple financial planning now will mean you won't have to worry in the future. By reducing your spending by as little as 5%, and using the savings for a protection product, you can ensure you protect your lifestyle and the remaining 95% of your finances. It really is a case of spend a little, protect the lot."