Households ‘need £25,000 to cope’

Good budgeting is vital to help families deal with the high cost of living, Skipton Financial Services has advised.

The typical household of two parents and at least tow dependent children needs to manage money well as £25,000 is required just to meet the typical basic needs of such a home.

This is according to a study by Skipton Financial Services, which stipulated that the net annual income of £24,600 would require a gross income of £32,702.

Among the costs faced would be £3,131 to pay off unsecured debt repayments such as loans and credit cards, as well as £4,730 for mortgages.

The weekly food shop amounts to £4,457 per year, filling up the car eats up £2,452 with £944 in other costs such as tax and insurance, £2,445 is spent on commuting and utility bills – an area where prices have jumped – has soared to £1,282. At the same time, council tax – which has been frozen since the coalition government took office – is nearly as high at £1,217.

Such costs may all place strains on family budgets, not least those like food, energy, petrol and diesel or car insurance, which have risen sharply in recent times.

However, having a budget planner may help people to get by more comfortably on such an income, or even on much smaller amounts, due to it analysing where all the money goes and identifying areas where less can be spent.

Commenting on the benefits of budgeting, managing director of Skipton Financial Services Andrew Barker said: "Get your bank statements and check all direct debits and standing orders. It is vital that you are aware how much is going out of your account and you may even spot things like magazine subscriptions or gym memberships that are no longer needed or no longer essential spends. Make a monthly budget plan and put everything on there. "

He also advised that consumers should factor in seasonal costs such as Christmas spending by simply taking the amount this costs and dividing it by 12.

Making even a few savings can help to save significant amounts of money, a report published last month revealed.

First Direct said those cutting down on small daily things like a latte, diet coke, chocolate bar and bought lunches could help save over £69 a week.

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