Savings: Income & savings levels rise slightly despite the recession

A new report from financial services company, Aviva, has shown a slight easing in the state of families finances in the UK, although single parents are finding life harder.

Household income

The Aviva Family Finances Report, which questions 12,000 families, showed that the average UK family takes home £2,150 per month after tax. Despite the tough economic climate and low wage inflation this represents a 4% rise on this time last year; above the current rate of inflation.

It would appear that a recent slowdown in the rate of unemployment has contributed towards the increase, which may well rise further, once the full effect of the latest rise in the Personal Allowance is felt.

Richard Kelsall, Head of Savings for Aviva, said: “Many UK families have experienced tough times in recent years, so it’s reassuring to see that people are getting to grips with their finances to weather the storm.
“Incomes have risen and debts are falling which suggests that families are working hard to get on an even keel.”

The news was not all good though, with the incomes for single parent families falling by 8% over the past year. The average single parent now takes home just £805 per month net of tax. It is thought that the changes to the benefit system could be partly behind this fall.

Savings

The report also found that, possibly due to the increase in household income, savings rates have also risen.

The average UK household now saves £45 per month, up 41% on this time last year, and the highest level since Aviva started to produce the report in January 2011.

It seems as as though savings are not being spent either, with the savings level of the average UK household rising by 6% to £1,288.

Financial experts point out however that despite the increase in savings levels, the average level is still low and many people still have no savings whatsoever with a third of people saying that they cannot afford to save whatsoever. Amongst single parents, who are particularly financially vulnerable and need to save where possible, nearly two thirds said that had insufficient spare income to save on a monthly basis.

Furthermore, with interest rates being so low, many people are put off saving. To get a real rate of return savers need to tie up their money for at least two years, which can be off putting to many, who may feel as though more access is needed, especially in such economically turbulent times.