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Scottish Friendly Disposable Income Index reveals half of UK households are financially fragile

  • After paying for essentials like housing, energy, water, groceries, transport and childcare, the average household has £905 left per month to save or pay for clothing, socialising, furniture and luxuries
  • Half of UK households (50.3%) worry about big unexpected bills and nearly a third (30.5%) of consumers are not financially comfortable
  • Almost a quarter of consumers (24.0%) think their financial situation will be worse in a year
  • Consequently fewer than half of UK households (45.2%) are in a position to save or invest regularly each month

The latest Disposable Income Index (DII) published today by savings and ISA provider Scottish Friendly has revealed that half of UK households (50.3%) are worried about coping with large unexpected bills. The quarterly report, which has been compiled along with leading think-tank the Social Market foundation, provides a unique insight into the financial health of the UK population. It analyses consumer sentiment, current economic data and trends to chart UK consumers' saving and spending habits and the consequent impact on disposable income.

The findings also reveal that despite improvements in the economic picture overall, a large minority of people remain pessimistic about their personal finances. Nearly a quarter (24.0%) of consumers believe their financial situation will be worse in twelve months’ time while almost a third (30.5%) don’t consider themselves financially comfortable suggesting they are already in some financial difficulties. Meanwhile nearly half of us say we are worried about money (47.5%).

It does seem that for many those concerns are justified. A sizeable minority of British households are spending beyond their means each month. One in five (20.3%) 18-24 year olds are spending more than their income each month just on housing and related costs, while more than a quarter (28.5%) are going into the red after paying for the other day-to-day essentials.

Even adults who should be well-established in their careers and starting to build family life are often struggling for cash – more than one in eight (13.9%) 25-34 year olds can’t afford housing and related costs on their monthly income, and nearly a quarter (22.4%) aren’t earning enough to pay for housing and other daily essentials.

Despite having higher wages than the rest of the UK, households in London and the South East find themselves squeezed the most when it comes to costs of housing. Median housing costs in London are £915 a month, 91% higher than in Scotland.

In other parts of the UK housing costs might be cheaper, but other everyday essentials eat up more of the budget. In Scotland, for example, childcare, groceries, transport and communications cost an average of £453 a month. These costs are only higher in Northern Ireland, where the median household spends £479 a month on these essential items.

Calum Bennie, savings expert at Scottish Friendly, said:
Headline economic data suggests that the financial situation of UK households should be improving. Subdued inflation, high employment and gradual increases in wages theoretically help consumers feel better off. However, any of these benefits seem to be offset by the rising cost of living and housing costs in particular. These day-to-day financial pressures are leaving people worried about their disposable income and a sizeable minority actually find themselves spending beyond their means every month. Consequently less than half the population are saving regularly. This kind of financial fragility should be a concern for UK policy-makers and businesses.


Income after housing costs

Income after essentials

Proportion spending more than income on housing costs

Proportion spending more than income on essential costs

Scotland £1,334 £881 5.7% 13.3%
Northern Ireland £1,245 £765 6.1% 10.2%
Wales £1,314 £985 7.5% 10.3%
South West £1,279 £903 7.3% 13.6%
West Midlands £1,242 £855 8.3% 15.0%
North West £1,072 £800 9.3% 15.1%
Yorkshire £1,334 £1,017 6.3% 12.5%
East Midlands £1,252 £895 6.9% 16.0%
East England £1,374 £1,008 5.6% 11.9%
South East £1,210 £811 11.8% 18.6%
London £1,191 £934 10.6% 18.8%
18-24 £825 £532 20.3% 28.5%
25-34 £1,079 £705 13.9% 22.4%
35-44 £1,171 £739 7.3% 15.2%
45-54 £1,207 £825 7.7% 15.9%
55+ £1,478 £1,198 3.4% 7.8%
Employed full time £1,278 £922 7.6% 13.0%
Employed part time £1,019 /td> £636 10.6% 21.7%
Self-employed £965 £546 12.9% 25.9%
Unemployed £1,067 £715 11.5% 20.1%
Student £766 £587 21.3% 30.7%
Retired £1,685 £1,395 1.7% 4.0%
  £1,264 £905 8.3% 15.0%

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