Half of all UK households ‘worse off than last year’

Around half of households in the UK (46 per cent) have run out of money before the end of the month over the last year, according to new research from Halifax.

The survey of 2,016 individuals aged 16-75 found almost one in ten (nine per cent) ran out of money every month in 2012.

However, there is a tendency for people to bury their head in the sand over the issue, with three quarters of households (74 per cent) in the same study saying they are coping well financially.

Most people think that money is at its tightest for those in their 20s, as student fees, finding a job and moving out of home often leave them with more expense compared to income, generating large amounts of debt.

Some 50 per cent of this group said they run out money before the end of the month at least once in the last year, while 11 per cent said they were without finances by the end of every month.

However, this figure actually increases among people in their 30s and 40s, with 58 per cent and 57 per cent respectively admitting they run out of money before the end of the month at least once in the last year. Of those people, 10 per cent in their 30s and 11 per cent of those in their 40s said they did so every month.

Once people get into their 50s the problem lessens with 20 per cent of people saying they run out of money at least once, with just eight per cent claiming it happened every month.

Anthony Warrington, director of personal current accounts at Halifax, said: "It is perhaps a symptom of the current situation that more people in their 30s and 40s are finding they run out of money before the end of the month.

"There is no easy solution but keeping a close eye on your finances can help with budgeting, and by monitoring your expected outgoings you can see how much you have left over the month."

Almost half of the participants (49 per cent) said they currently feel worse off than they were a year ago. Only 13 per cent of households said they are now better off financially compared to the same time the previous year.

It was those in their 40s and 50s who were found to be feeling the pinch the most, where 54 per cent and 60 per cent respectively said they are now worse off. In comparison just 40 per cent of those in their 20s, and 41 per cent of those in their 30s claimed they are faring poorer financially.

"Ignoring money worries at any age will not make them go away, and is more likely to result in financial problems down the line," Mr Warrington added.

It is important for those who are struggling with their finances to address it sooner rather than later before they end up in too much personal debt. If an individual is spending too much money on debt repayments they may potentially benefit from a debt consolidation loan, which can reduce monthly outgoings.

By Joe White