Since the beginning of the recession the earnings the average family needs to maintain a minimum lifestyle has risen 16% above inflation, claims a recent report. The research, recently published by the Joseph Rowntree Foundation, shows that families need more money than ever to maintain a socially acceptable standard of living.
The report – which is an update on the foundation’s 2008 report – was conducted by interviewing hundreds of people in the UK about their finances and what they consider necessary expenses. A Large part of the inflation-busting increase, it was found, came from the rising costs of transport, utility bills and childcare. Findings suggest that whilst most are aware that times are tough and costs were rising the real-term income of many working families was falling, in many cases due to tax credit cuts.
It also found that whereas a single person now required a gross income of £16,400 per year to meet their minimum expectations, a family of two adults and two children required an income of £36,800 per year (before tax).
What was interesting is that despite the growing hardship people are facing, their expectations have not fundamentally changed since the last report was carried out in 2008.
People in urban areas (excluding London) still considered a car as an essential item, whereas a computer and the internet are now accepted as a necessity for those of working age with children. People’s expectations had fallen in relation to eating out and what constituted an acceptable budget for Christmas and birthday presents.
Most still found that a one week holiday was a necessity, although most accepted that break did not have to be abroad and for those with children a one week self-catering holiday in a resort like Haven or Butlins would be sufficient.
It is clear that whilst the financial situation for many families is difficult, attitudes towards what constitutes as a ‘necessity’ are also changing in line with many aspects of modern life.
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