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Households only 19 days from the breadline, says L&G

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30/08/2022
Close to 2 million adults have no money left each month after paying their bills, Legal & General has warned.

British households are, on average, only 19 days from the breadline, according to research by Legal & General (L&G).

The insurer found that close to 2 million adults have no money left each month after paying their bills. This represents a rise of 330,000 people over the past two years.

Those earning under £20,000 a year, equating to 5 million people across the UK, are living pay packet to pay packet. The average household in this group has no safety net should the worst happen.

L&G’s findings are based on a survey of more than 5,000 consumers who were interviewed between late June and early July of this year.

Cutting back becoming the norm

The survey found that households are now cutting back on essentials and luxuries in a bid to rein in costs. Even those with no debt and a higher annual income of more than £50,000, are being cautious: a little over 60% have already cut back on essentials.

L&G found the amount of time that households can fund basic living costs, like utility bills, housing costs and food, has fallen by 21% or the equivalent of five days less in comparison to April 2020.

UK households have average savings of £2,431 and debts of £610. With average daily expenses totalling £93, this would see the average household run out of money in less than three weeks (19 days) if they were to lose their income.

The research found that most people underestimate how long their money would last, assuming they would have 60 days of breathing room were they to lose their job. However, in reality they would have less time, given the surge in energy bills.

On Friday, Ofgem confirmed the average energy bill will rise by £1,578 per year from October, due to a rise in the energy price cap to £3,549.

Bernie Hickman, chief executive of Legal & General’s retail business, said: “The cost of living crisis is squeezing the purses of people all over the country, leaving households of every shape and size with money worries.”

On a positive note, he is keen to point out there are resources available to help people to make the most of what they have, such as MoneyHelper.

“It may feel overwhelming but we encourage people to do what they can now so they are best prepared for a further squeeze on finances coming this autumn,” Hickman concluded.

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