According to the insolvency trade body R3, 28% of people had spent more than they had received, (on a monthly budget), with more than 3% spending over £300.00 more than their income.
These figures are extremely worrying given that a household ‘budget deficit’ means that people are relying on credit to supplement their income each month.
The survey also found that people who rent are more likely than homeowners to have more money going out than they were receiving each month.
Looking at renters in isolation, the figures show that more than a third of renters had said they had spent more money than they had received in March 2019. This compares with just under a quarter of homeowners.
In terms of the age demographic, millennials aged 25-34 years old were the most likely age group to report spending more than they received in income. The survey found 43% of this cohort spent more than they income in March.
Perhaps even more worryingly 12% of the over 65s were reported in this survey to have spent more than they had received in March. This figure has to be taken in the context that this age cohort would usually have a fixed retirement income with limited scope to increase and make good that deficit.
Nearly of a quarter of the people questioned said they don’t have any savings at all and furthermore the survey indicated that 7% of adults reported that they have borrowed £100.00 or more from family or friends in the past month.
Mark Sands, Chair of the Personal Insolvency Committee at R3 commented, “this is a worrying snap shot of British adult’s personal finances.
For some people a month of deficit won’t be an issue, as it may be a one off and they maybe able to cover the overhang through using savings or borrowing.
However, for others these options will be less readily available, leading to potential problems ahead if the deficit persists.
With the research finding that a large minority of British adults don’t have any level of savings at all at the moment, it’s worth sounding the alarm about people’s ability, or otherwise, to cope with unexpected hits to their finances.
Debt issues can suddenly spiral due to changes in circumstances and overspending each month does not leave any room for saving for a significant proportion of people.”
If a person is regularly over spending each month then they need to seek expert debt advice in relation their personal finances as soon as possible. It is possible this person is insolvent and cannot afford to meet their credit commitments each month. If this is the case then there are options and solutions available including a Debt Management Plan, Individual Voluntary Arrangement or even bankruptcy if the circumstances necessitate this.
For advice relating to your specific circumstances, please call Farleys’ debt specialists on 0845 287 0939 or contact us online.