Wouldn't it be nice to have more money in your pocket at the end of the month? Well, it looks as though many people are able to enjoy just that, with new research from Scottish Friendly finding that their level of disposable income has actually increased.
The figures, from the latest Disposable Income Index (DII), show that typical households have seen their monthly disposable income (the amount of money left over after all the daily necessities have been paid for) rise by £95 over the last quarter, with the average now standing at £1,000 (up from £905).
This has been driven by continued low rates of inflation, the introduction of the National Living Wage and moderate pay growth across the private sector, the report noted, but whatever the reasons, it can't be denied that more disposable cash has got to be welcome news.
But is everything as it seems? Looking closer at the research shows that some households find things more difficult than others, with those aged 35-44 having just £825 left over each month after buying the necessities, while 25-34 year-old have only slightly more (£831). However, at the other end of the scale, retirees are far better off, with this demographic having an average disposable income of £1,585.
This shows that those in work continue to find themselves with less disposable income than retirees, with the costs of daily living seriously taking their toll. Much of this can be attributed to housing costs – the average 25-34 year old spends £836 on housing each month, with £626 going on rent or mortgage payments, while the average spent by those aged 55+ is just £302, with no mortgage payments whatsoever.
Older people often work longer, too, which means they're still getting an income without needing to spend it on housing, while private pensions provide another income boost. Furthermore, the report also noted that younger generations have seen slower pay growth compared with previous generations, which all adds up to mean that older households are – on average – significantly better off.
Nonetheless, the fact that disposable incomes as a whole appear to be rising paints a healthier picture of the state of the nation's finances, but even so, households aren't getting complacent. Indeed, many remain pessimistic about their financial prospects and are worried about unexpected financial or economic shocks, with just 34% of households believing they'll be financially better off in 12 months' time.
Conversely, 24.4% believe that things will get worse and 47.7% are worried about how they'd cope with an unexpected bill, while 36.5% said they're worried about their debts and 50.9% admitted that they're not in a position to save regularly. Many are also concerned about the future of the economy and what it would mean for their finances, with uncertainty weighing heavy on their minds.
"It's encouraging to see the median level of disposable income increase this quarter," said Calum Bennie, savings expert at Scottish Friendly, "[but] our study continues to suggest that people are feeling financially fragile. Worries persist about preparedness for unexpected bills and debt, and not enough households are in a position to save at the end of the month, which is a definite concern. With financial security still seemingly very out of reach for many households, policy makers and businesses alike should take heed of the persistent insecure sentiment in the UK."
Whether you're revelling in all that extra disposable cash or are still finding it difficult to make ends meet, the key is to make sure you're prepared for all eventualities. Saving on a regular basis is essential – we all need a financial buffer, after all – and if you've got extra disposable cash, this would be a great way to put it to use.
Even if you haven't got quite so much left over at the end of the month, just remember that saving little and often can soon add up, and if you have a bit of an emergency fund, uncertainty hopefully won't affect you quite so much.
Check out the top savings accounts to find the perfect home for your disposable income
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