The financial outlook of the UK's families has improved over the past year, after new research revealed that rising incomes and savings habits have put both measures at their highest point since 2010.
However, according to Aviva's latest Family Finances Report - which has tracked household finances for different family groups as the UK economy has recovered from the last recession – income inequality persists across groups, with household debt remaining stubbornly high at an average £11,250.
The summer 2016 edition shows the typical family's monthly take-home income has now reached £2,151, up by £128 (6%) since last winter to reach the highest point since the measure has been tracked.
With national wages increasing by 2.6% and unemployment at a ten year low in Q1 2016, the data indicates household income across all family types have benefited while the introduction of the National Living Wage in April is also likely to have contributed to a rise for families on lower incomes.
With incomes on the rise, families have also enjoyed a boost to the level of savings and investments they hold in a further sign of an improving picture for the typical family purse. The amount held by the typical family has increased by 42% year-on-year to reach £4,426 and is 41% higher when compared to last winter.
Aviva's data also suggests families have been able to put more money aside so far this year, with the typical amount saved each month reaching £114, up £9 since last winter. Fewer families are finding themselves unable to save: while almost a quarter (24%) save nothing at all each month, this is the lowest level since the data was first measured in winter 2010.
However, despite the improvement in income and savings, household debt – excluding student debt – is now almost a fifth (18%) higher than it was last summer, standing at £11,250.
Personal loans (up 3% to an average of £2,250 owed), credit cards (up 12% to £2,190) and hire purchase (up 53% to £1,360) are identified as the three largest sources of debt that have contributed towards the annual increase.
Over the same period, payday loans have increased by 76% from £370 to £650, while the amount of debt owed via an overdraft has dropped year-on-year by almost a quarter (24%) from £870 to £660.
Outstanding mortgage debt has continued to rise by a rate of 3% since last summer and now stands at £66,580, likely as a result of the continued rise in house prices.
Despite the broadly positive news, a spanner may have been thrown in the works by the EU referendum, with worries on the rise amongst families.
While less than a quarter of families (23%) said they had been concerned about their future finances before the Brexit vote, in the aftermath of the vote to leave, this has increased by 12 percentage points to 35%.
"The financial situation for families has shown encouraging signs of improvement recently, with both incomes and savings levels now standing at their highest level since 2010," said Louise Colley, Aviva customer propositions director. "This has been buoyed by record low levels of unemployment, which looks to have given a boost to families across the income spectrum.
"That said, income inequalities persist across different family groups, and the family purse has also been affected by a simultaneous rise in levels of household debt in the last year. With the economic outlook more uncertain in light of Brexit, families need be doubly sure they are able to manage their commitments effectively in the coming months ahead."
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