Households ‘struggling’ as savings are reduced

Almost half of UK households have described their current financial situation as precarious.

The latest MoneyMood survey by Legal & General for July 2013 discovered 44 per cent of people said they are merely surviving, which means they have enough money to cover bills and debts, but cannot afford to put much aside for the future. 

Even more worrying, though, is the fact 11 per cent of respondents do not have enough cash to pay for their monthly expenses and these people could be in danger of running up large debts over time. 

The average amount of money being saved – by those who can afford to save – is £42, which represents a decrease of £27 when compared with the same month of 2012. On top of this, the typical monthly shortfall for struggling households has more than doubled in the past 12 months, from £42 to £85. 

John Pollock, chief executive officer of Legal & General Assurance Society, said he is pleased there is some good news to report, as "more than half a million households are no longer struggling to make ends meet compared to the third quarter last year".

"Perhaps a worrying development is the sharp rise in the monthly shortfall for those households who say they're struggling to pay the bills. It appears that those unable to cover bills and debt from their income are seeing their monthly shortfalls growing significantly," he added.

Mr Pollock stated there could be further problems in the offing for households, as the colder months will shortly be upon the UK. This means families will have to rely on their heating systems, which will push energy bills higher. 

This could see more people drop into fuel poverty. Earlier this year, the government revealed the definition of fuel poverty was being altered in an effort to make sure the right people are targeted. A household will be defined as fuel poor if total income is below the poverty line and energy costs are higher than typical.

By James Francis