Life on a low income

Document type
Report
Author(s)
Green, Katherine
Publisher
Resolution Foundation
Date of publication
5 April 2012
Subject(s)
Families, Children and Young People, Employment
Collection
Social welfare
Material type
Reports

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In April 2011 Resolution Foundation started following 7 low to middle income families across England to track their financial and economic position and how their lives changed over the course of 12 months. This report summarises their experiences over the year and the key challenges faced by the families.

The families represented the broad range of household incomes covered by the Resolution Foundation’s definition of low to middle income - but it was striking that their experiences and challenges bore many similarities. Benchmarks for what was seen as a ‘good’ standard of a living were in tune: all aspire to own their own homes although 3 of the 7 currently do not; all aspire to be in work and not reliant on the state; and all aspire to get to a point where they not living hand to mouth financially, and are able to save for their future and their children. In the main the families exhibited a relatively high degree of awareness about their finances and managed them relatively closely - budgeting on a weekly or monthly basis. Several had accumulated debts in the past when credit was more freely and cheaply available and had since implemented new methods of managing their finances, learning from their experiences.

As the year progressed, all were finding it increasingly difficult to afford day to day living costs as prices went up and incomes went down. In response to rising pressures, most of the families were deploying new coping mechanisms and these developed over the year. These ranged from the more radical - switching to interest only mortgages and turning off the heating, to the more minor - using price comparison websites, buying value brands and using the car less. All were finding it hard to save and many did not have financial plans in place for provision in later life.

Detailed exercises with the families brought out five areas that were most prominent in terms of compromising their current or future standard of living. The rest of this report focuses on their experiences of each of these areas in more detail, covering housing, childcare, work and skills, budgeting, finance and the cost of living, and debt

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