The 26-page study, The Aviva Family Finances Report, found that more families were taking steps to provide themselves with a financial safety net by increasing their monthly savings if their incomes rise, and taking out insurance cover.
According to the report, nearly 45 per cent of families with two or more children were committed to taking out life insurance policies. Single parents also increased their uptake, from 17 per cent in August 2012 to 21 per cent in June 2013.
Families with extra income have boosted their monthly saving habits. The report found that the average savings pot had risen from £1163 in May 2011 to £3281 at the end of June 2013. Regionally, 78 per cent of people living in London were making monthly savings, compared with Yorkshire where 62 per cent of the population was saving monthly.
However the typical monthly expenditure among UK families had fallen to counterbalance their savings. The report showed that spending on luxury items had reduced, while many families were making monthly debt payments to reduce their debts.
With property prices on the rise and the difficulty of raising a deposit, homeownership among UK families dropped slightly by 2 percentage points since May 2011.
Although the majority of families had increased income, benefit cuts as part of the current austerity measures have gradually reduced the number of families receiving income through the welfare system.
This could be a factor behind the recent uptick in UK families who turn to unsecured borrowing. The report suggested that despite the rise in average family income, people were still concerned about their ability to keep up with debt payments.
Adviser view
Chris Dunston, chartered financial planner for Devon-based Artavia, said: “The only thing is to have an appropriate budget. This is the key to solving most financial problems. For example, I met a new client the other day who had different options for retirement, but he hadn’t even realised what exactly he needed and what his goals were.
“So having an appropriate budget is a good place to start, then you can investigate the items in that budget that are expensive, such as life assurance costs and pensions. Does the employer offer a scheme? Are you a member? Looking at things such as a budget really helps. It isn’t rocket science. You need to understand that the bills will arrive, and yet people seem to forget that fact and when their bills are due.
“It can be as simple as every time you walk in through the door, taking £1 out of your pocket and putting it into a jar. I think people have got out of the habit of saving and they need to get back into it.”
