Page last updated at 12:38 GMT, Tuesday, 22 January 2008

Millions 'spend more than income'

A wallet
Consumers are being urged to rein in their spending

Five million people, or one in 10 adults, spend more than they earn on a monthly basis, according to financial comparison website Uswitch.

The website said a further fifth of adults have no spare money left at the end of the month.

Half of those living beyond their means rely on overdrafts and credit cards to plug the gap, it said.

The findings come amidst widespread concerns that higher debts may push more people into insolvency this year.

'Spendemic'

Researchers spoke to 4,200 adults across the UK, and analysed Office for National Statistics (ONS) data on income and expenditure.

AVERAGE MONTHLY SPEND
Income: 2,607
Essential items: 1,229
Non-essential items: 865
Debt repayments: 356
Surplus: 157
Source: Uswitch/ONS

Uswitch concludes the UK is in the grip of a "spendemic" which risks spiralling out of control.

It found that the average consumer has 157 left at the end of the month after their normal expenditure.

The analysis revealed that spending on non-essential items has risen 65% over the past decade, outpacing growth in both average net earnings, and essential living costs, which rose by 48% and 43% respectively over the same period.

According to the Uswitch findings, the area of non-essential spending showing the biggest growth is tourism.

Consumers need to start paying serious attention to their spending habits
Ann Robinson, Uswitch

The amount spent on holidays has more than doubled between 1997 and 2007 to reach 1,068 a year.

Spending on other forms of recreation and culture rose by 76% over the same period to just over 250 a month.

Squeeze

Uswitch said average debt repayments jumped from 174 in 1997 to 356 in 2007, an increase of 104%.

At the same time, the number of credit cards issued has almost doubled from 36 million to 71 million.

"Britain is suffering from a bad case of affluenza," said Uswitch director of consumer policy Ann Robinson.

"It's clear that our salaries can't keep up with our 'Hello' lifestyles.

"With the credit crunch beginning to bite, consumers need to start paying serious attention to their spending habits," she added.

Higher mortgage costs and energy bills are continuing to squeeze household income.

The accountancy firm Grant Thornton has already warned that excessive spending this past Christmas would be the final straw for many people.

It predicted that 28,000 people would declare themselves insolvent in the first three months of this year, with the total eventually reaching 120,000 for the whole of 2008.




RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific