18 Feburary 2019
As family spending rises, so does the need for a protection “Plan B”
With incomes squeezed, savings at historic lows and borrowing levels increasing to levels not seen since 2008, the latest Office for National Statistics (ONS) snapshot of family spending makes for worrying reading.
The “Family Spending in the UK” report states it cost £572.60 per week to run the average family home (a 13 year high in real terms once inflation is taken into account, and a weekly increase of £18.40 on the year before).
We see that a huge 1.3 million* and growing number of people in the UK now find themselves increasingly stretched. They’re shouldering the multiple responsibilities of caring for their children, still financially dependent ‘kidults’, as well as sick, disabled or older relatives. The sheer toll this can have on work and life choices as well as on a key bread winner and care provider’s mental wellbeing, and the stress placed on their financial health and resilience is a significant concern. What is also a very real concern is the fact that this is taking place against a backdrop of unprecedented reforms to our working age welfare safety net; this welfare safety net change now extending to those in later life as evidenced by the Pension Credit changes in January.
Looking at the ONS report in a little more detail it reveals that the patterns of working age family spend has changed sharply. We see households reducing their spend on eating out and buying clothes, switching instead to essentials. Food spending has increased by 8% to typically £60.60 a week with more than 27% of weekly expenditure going on transport, housing, fuel and power. The data highlights that in overall terms, transport - simply getting to work, getting the kids to school etc - is the biggest single weekly household cost. It averages £80.80 or just over 14% of overall family spend.
Scottish Widows research shows that only 37%** of primary breadwinners have any form of financial protection in place. This exposure is hugely worrying when you take into account the focus of a household’s income is increasingly the essentials, not the luxuries.
This ever growing dependency on income and the ability to work leaves families more exposed to health related income shocks. There is real value in making time to talk to your clients about intersecting family, lifestyle and mortgage financial resilience, and the benefits of appropriate protection advice and solutions.
To aid, stimulate and inform discussion, it’s worth also noting that:
- the cost of raising a child to 18 now comes in at more than £150,000 for couples, or more than £183,000 for lone parents.***
- research from Skipton Building Society found that about 2.7 million parents currently have grown-up children living at home, with only 40% of those “tenants” contributing financially to the costs of running the household.****
- the numbers of these ‘kidults’ are increasing too with figures from the ONS suggesting the number of 18 to 30-year-olds living with their parents has increased by 6% in the last 10 years.****
When all these factors are taken into account, the need to discuss the financial resilience not just of an individual, but to safeguard the household as an entity becomes increasingly clear. It’s a case of talking about protecting today to safeguard tomorrow…
* Office For National Statistics, 2019
** Scottish Widows Protection Research 2018
*** Loughborough University’s Centre for Research in Social Policy
**** Cited in www.independent.co.uk January 2019