Budgets to get even tighter – so be prepared - Savings - News - Moneyfacts

News

Budgets to get even tighter – so be prepared

Budgets to get even tighter – so be prepared

Category: Savings

Updated: 08/11/2013
First Published: 08/11/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Household budgets are already squeezed by rising costs of rent, mortgage payments and utility bills, but it could get even worse – a new report has revealed that an increasing proportion of our income will be taken up by these household costs, with earnings not keeping up with expenditure.

The PwC UK Economic Outlook painted a positive picture of UK growth, but this will take its toll on our budgets. The proportion of income taken up by housing and utilities is already up from 20% to 25% since the financial crisis hit and this could rise to 30% by 2030, and some could see their bills rise by considerably more.

This is before spending on food has been taken into account, an outgoing which is also expected to increase, and with the addition of stagnant earnings growth (the report found that real earnings growth will only resume by 2015 and even then at a modest pace, with earnings in 2017 still being 6% below the peak levels of 2008) it could end up putting a huge strain on household budgets.

This all means householders need to be prepared, with industry experts urging people to get into the savings habit to prepare for the rising costs of living.

A cash ISA is a great way to get things started, allowing individuals to save up to £5,760 per tax year (the level of which will rise in the year 2014/15) completely tax-free. A stocks and shares ISA is a slightly more complex alternative, or for those willing to lock their money away for a guaranteed return a mid to long-term bond could be the solution.

Even putting away a modest amount every month could make a difference, and by 2030 householders could have a valuable nest egg that could help them prepare for increasing pressures on their budget.

What Next?


Save up to £320 on gas and electricity for your home

Find the best mortgage deals with our whole of market search & independent best buy tables

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Savings being used as a festive financial buffer

Good news from RCI Bank UK – its latest research shows that many of us are saving more than we were a year ago, but the question is, will you be dipping into that buffer to cover the cost of Christmas?

6 of the best easy access savings accounts

Easy-access savings accounts are as simple as they sound – they allow you to access your money whenever you need it, without having to give advance notice, and they also allow you to pay into them at any time. Here are six of the best.

Start saving for Christmas… 2017!

Christmas is just around the corner and our annual festive splurging is starting to step up, but are you prepared? It may be too late to start saving for this year’s festive spend, but it’s never too early to start for next year’s!
 
Close