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Family debt rises as incomes fall

Family debt rises as incomes fall

Category: Money

Updated: 21/08/2012
First Published: 21/08/2012

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 It is now over 6 months old so the content may be out of date.

The average monthly family income has fallen from £2,150 to £2,003 over the past quarter, with a higher number of families turning to loans to accommodate living expenses.

The fall in average income is believed to be due to more parents cutting their hours and taking unpaid leave during the school holidays, although this is impacting on living costs during the typically busy holiday season.

It has become clear that many parents are making the decision to spend time with their families during the summer months, despite a reduction in income.

According to the research by Aviva, nearly half of parents have stayed at home this summer forgoing holidays for days out. Despite this, the average family spent roughly £148 per month on leisure activities and entertainment, a rise of 33% compared to the same period last year.

In turn, average family debts rose by 13% to £10,563, with a typical family borrowing over £8,000 in personal loans.

Louise Colley, head of protection sales and marketing at Aviva, said: "As every parent knows, school holidays can be a financial challenge, particularly for workers who don't receive paid leave.

"However it seems that families are trying to cut their cloth accordingly and the fact that some have dipped into savings this quarter suggests they may have been planning ahead. Families can take comfort in the fact that summer is the ultimate seasonal blip and that normality will return soon!"

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