Those living beyond their means “approaching 5.3m”

New research has found almost 5.3 million people – eight per cent of consumers – are spending more than they earn, potentially heading towards debt management problems, arrears and bankruptcy.

The study released by Legal & General found 57 per cent of people are now earning more than they spend on bills and debts, a decrease of two per cent since the last review.

Across the UK, respondents were worse off than in 2005, the findings show. Those living in the north and in the east Midlands are currently faring the worst, with 17 per cent of people finding they have funds left over after paying everyday expenses.

Legal and General’s Director of Wealth Customer Marketing Jonathan Latham said: “We would urge customers to review their finances and carefully look at their spending and savings habits. With some careful budgeting it is possible to keep on saving, even a small amount.”

He added people who are experiencing difficulties should seek professional debt advice.

According to the survey, women are adapting better to the credit crunch than men.

By Morwenna Kearns