The economic downturn. The rising price of buying a property. The increasing cost of living. Open any national newspaper and on any given day and you’ll likely be faced with all manner of horror stories about the economy.
But what is really the truth? What does the “average” Brits financial life really look like? Just as interestingly, how does your financial situation compare with the rest of the population?
This month we’ve pulled dozens of statistics from reputable sources such as the Office of National Statistics and the Bank of England to try and paint a picture of the average Brit’s finances. Prepare for a few surprises…
Income
The most recent statistics put the average British salary at £27,600 per annum for full-time workers; equivalent to £528 gross per week. Interestingly there is still a serious disparity in earnings between men and women, with the average male worker earning £567 per week, with women disappointingly earning an average of £471.
Of course, these figures represent the median incomes; but what about the extremes? According to the ONS the lowest 10% of Britain’s population earned less than £297 a week, while the top 10% of earners brought in at least £1,035 per week.
Besides the disparity in earnings between men and women there are significant geographical differences, with those in London and the South East generally earning considerably more than those in other parts of the British Isles. At one extreme the average gross salary in the City of London is £921, while Derbyshire comes bottom of the rankings with an average income of just £389 per week.
Lastly, the data suggests that earning potential typically increases with age, reaching a peak for those in the 40-49 age-bracket, where-after a gentle decline is observed.
Spending
For the average Brit, housing is their largest single expense. The ONS tells us that the average household spends 14% of their income on housing – which includes rent, fuel and electricity but not mortgage payments.
Almost as expensive comes transportation, with the average Brit spending £70.40 per week getting about.
Clearly, these expenses aren’t causing too much financial hardship as our third biggest expense, accounting for 12% of our spending, comes in the form of recreation and culture. Indeed the average Brit spends the equivalent of £22.40 per week on holidays alone and £4.30 on pet care.
Unsurprisingly, thanks to spiralling property prices, those of us in London and the South East tend to spend the most money.
Perhaps rather more interestingly, the data suggests that rural living is also typically more expensive than an urban lifestyle. While urbanites generally spend more on housing, the reduced cost of transport means that city-dwellers on the whole, spend less than their country-side counterparts.
Debt
The average Brit maintains a surprisingly small outstanding mortgage debt of just £85,000, though this average is of course brought down by the numbers of individuals owning their property outright, and an increasing population of long-term renters who are unable or unwilling to step onto the property ladder.
On top of this the average household is responsible for £8,000 in unsecured debt, with 70% of both mortgage holders and renters maintaining unsecured debt in the form of loans, credit cards and overdrafts.
While concerns may exist about how forthcoming interest rate changes could affect these indebted individuals, at present most Brits are confident about their financial situation. Indeed, 75% of those surveyed claim that their debt is “no problem at all”, while 63% state that they can keep up with their regular bills “without difficulty”.
Savings
Interesting statistics published by Lloyds Bank in 2015 suggests that despite poor returns on savings the average Brit has more assets stashed away than ever before. In August of last year, the average British household had £145,566 in savings, spread across asset groups such as stocks and shares, pensions and cash holdings.
To put this into context this is a 452% increase over the average household savings in 1975.
That said, there is some serious disparity between households, with 36% of households having no savings of any form, and 13% more having savings of less than £1,500.
Furthermore, while this increase in saving rate is impressive at face value, a closer inspection shows that the proportion of money saved has varied massively over that period, generally in line with interest rates.
Last year the average household savings rate was a mere 6%, down from 16.4% in 1992, most likely due at least in part to less-than-exciting returns.
Home Ownership
The “rent versus buy” argument has been a long-fought battle. According to sources the high-point of home ownership was 2003, when 71% of properties were owned either outright or through a mortgage. In recent years, however, as property prices have climbed, so this ever more people have been priced out of the housing market.
The most recent figures suggest that figure now stands at 65% and is expected to continue dropping for the foreseeable future. Further credence is given to the rising private rental market by the Council of Mortgage Lenders. Their figures show that 71% of people born in 1970 had bought at least one property by their 40th birthday; however they predict that just 47% of those born in 1990 are expected to be home-owners by the same age.
Retirement
Opinions on retirement are complex. On the one hand, most Brits still believe that workplace pension schemes are the safest way to save for retirement. The second most popular answer was investing in property.
At the same time, 44% of the population believes that property investing is likely to make the “most of their money” while just 25% believe that their traditional pension offers the healthiest return.
No wonder that companies like Wellesley & Co, who allow you to invest in the property market through their peer-to-peer platform, are gaining so much in popularity. This is especially so when the lowest expected returns among the British population are from stocks and shares; once the mainstay of the investment market.