A significant proportion of people across the UK have multiple income streams at present, with wages, tax credits and benefits all among the complex f…
A significant proportion of people across the UK have multiple income streams at present, with wages, tax credits and benefits all among the complex financial makeup of modern Britain.
Research published by thinkmoney revealed how almost half (45 per cent) of UK adults now have two or more sources of income each month, with 18 per cent – the equivalent of nine million Brits – having three or more.
The study found that the most common income streams being used by individuals were both theirs and their partner's wages, working or child tax credits, pensions, child maintenance payments and benefits (including child benefits).
Furthermore, the rise in the number of self-employed workers over recent years has resulted in a considerable increase in the levels of sporadic and fluctuating income being witnessed by many people.
Thinkmoney stated that this complex financial picture means many people could be struggling to make ends meet, as they have money coming into and going out of their bank accounts throughout the month, leading to an increased possibility that the money will not be there when it is needed.
Overall, the research also revealed that 18 per cent of people currently have ten or more direct debit or standing orders set up to go out of their current account each month – creating considerable headaches for those who are not on top of their finances.
Spokesperson for thinkmoney Ian Williams commented: "It tempting to think of budgeting as a simple process – with a single income from which all the month's bills can be paid.
"However, for half of us life isn't that simple and people with multiple incomes often find it tricky budgeting across the month for large outgoings such as mortgage or rent payments."
Indeed, budgeting should form an essential part of any sensible money management plan and it is an especially important practice for those who have several income streams to be aware of and have a significant number of comings and goings from their account each month.
As such, Citizens Advice suggests households go through and list out all of their income for each month and create a spreadsheet that depicts when all of these varied payments will come into their account.
They should then do the same with their outgoings – predicting the likely amounts and the dates these payments will be collected – to ensure they have a working cashflow for their household finances and are not running the risk of blindly going overdrawn each month as a result of their complex financial situation.
Examining areas where expenditure can be reduced is also another good way to make the whole system of money management that much more straightforward.
Furthermore, individuals facing mounting debts will be in a better position if they put together an effective budget and cut back in areas they can afford, as this will help to demonstrate to their creditors just how much they can afford to repay and can be a positive tool in ensuring repayments are not set at an unaffordable level.
Posted by Joe White