Living costs take up over half of monthly expenditure

Basic living costs are now taking up half of people’s monthly expenditure, according to Halifax.

The building society cited data from the consumer price index, which shows a noticeable increase in the proportion of basic goods as part of the typical basket of goods in the last decade.

According to the latest figures from the Office of National Statistics, paying for essentials such as food, shelter, water and heating accounts for nearly a quarter (24.3 per cent) of total monthly expenditure.

Once other necessities like transport, health and personal care are taken into account then basic outgoings account for more than half (51.9 per cent) of all expenditure. Ten years ago this figure was 48 per cent, which represents an 8.1 per cent rise.

Because of this, the amount of money left for other spending has fallen dramatically, with many choosing to reduce the amount they spend on leisure, recreation and culture. Compared to 2003, 13.5 per cent less is now spent in these areas.

Transport costs have now become the largest monthly expense, representing 14.8 per cent of total outgoings. According to Halifax, those who run a car will be paying more than ten per cent of the monthly expenditure.

Director of personal current accounts at Halifax Anthony Warrington said: "Everyone has different priorities when it comes to spending, but the rising cost of basic goods and services has left people with less to spend each month once essentials like food and shelter have been accounted for."

One area that isn’t taken into account is debt. If people are spending even more paying off money they owe each month then they will have even less left in their bank accounts. It’s important for people to assess their financial situation and look to find ways they can reduce their debt while freeing up more money.

Debt consolidation loans can end up lowering the amount paid out each month and is worth looking into for those feeling lumbered with debt.

By James Francis

Find out more about money management on the ClearDebt blog.