aviva family finances report 4 - november 2011

8/3/2019 Aviva Family Finances Report 4 - November 2011

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The Aviva FamilyFinances ReportAutumn - 2011

FAM_REP_V4_33276_BRO.indd 1FAM_REP_V4_33276_BRO.indd 1 09/11/2011 10:4309/11/2011 10:43


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The typical UK family

While 84% of the UK population lives as part of a family, theconcept of the traditional family is now outmoded. In its

Family Finances Report, Aviva recognises there are various

different types of modern families (see page two for groups

tracked) and looks at their individual approaches to finances

including wealth, debt and expenditure.

The Aviva Family Finances Report 2

In addition, this report looks at how families often find themselves supporting

members of their own extended family or friends, both financially and practically.

This generosity can have a negative impact on their finances, with just under half

saying it hampered their ability to save, and almost a quarter suggesting that it

made repaying debts more difficult. Pensions also suffer and Aviva has calculated

that over 40 years, each family could be giving away more than 70,000, almost

three times the typical pension pot at retirement.

Overview:

Income Incomes continue to fall as unemployment increases (pg 4).

Spending trends Families cut spending on luxuries as inflation bites (pg 7).

Wealth

Savings pots fall to 967 (982 - Aug 2011) as monthly savings hit lowest level

in 2011 (19 Nov) (pg 8).

Product mix Number of families with mortgages rises from 45% (Jan 2011) to 49%

(Nov 2011) as availability increases (pg 9).

Debt Typical family owes 10,604 or just under half of annual household income

(23,796 Nov 2011) (pg 11).

Look to the future Worries around the rising cost of living (61%) fall as consumers

acclimatise (pg 13).

Families pull together Almost a third (31%) provide financial support to their family

and friends (pg 14).

Families give away 2% of income Typical financial support to family and friends

amounts to 442 annually (pg 16).

Finances take a knock 46% said supporting family and friends meant they are less

able to save, 24% struggle to repay debts and 11% put less into their pension (pg 16).



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1. Living in a committed

relationship* with no plans

to have children


relationship with plans

to have children


relationship with one child


relationship with two

or more children

5. Divorced/separated/widowed

with one or more child

6. Single parent raising one

or more child alone

* For the purposes of this report, a committed relationship is defined as either one where two people are married or living together.

The UK modern family

Thirty years ago, it was relatively safe to assume that a nuclear familyconsisted of two parents and one or more children. However, as society has

changed, this is no longer the case. In this report, Aviva looks to recognise

the most common types of modern family based on customer profiles and

Government data.




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Average income continues to fall

The typical monthly net income of a UK family (i.e. the median family in the middle of the sample) is now 1,983 (Aug 2011

2,018) revealing a slight drop (two percent) on the figures recorded in the previous quarter.

The main driver behind this fall appears to be the six percent drop recorded among those living in a committed relationship with

one child. Their income fell from 2,327 (Aug 2011) to 2,196 (Nov 2011).

The summer Family Finances Report explored the impact that children especially young children can have on family incomes and

parents earning capacities - so this may well be a contributing factor to this drop.

% of people on different income levels over four quarters (2011)

All other groups also recorded lower incomes than the last quarter except for those in a committed relationship with no plans to

have children. These families actually saw an eight percent increase from 2,180 (Aug 2011) to 2,347 (Nov 2011). However, their

income is still lower than those in a committed relationship with plans to have children (2,402 Nov 2011).

It is interesting to note that these two groups have the highest number of people deriving income from a primary job i.e. full-

time employment held by the main breadwinner so any salary increases would be felt most prominently here. Indeed, 85% of

those in a committed relationship with plans to have children and 77% of those in a committed relationship with no plans to have

children have this type of income.

At the other end of the scale, the number of families who survive on less than 1,250 per month has increased slightly to 30% (Nov

2011) from 29% (Aug 2011) a worrying trend in the current high inflation environment.

Income


750 or less 751-1,250 1,251-2,500 2,501-5,000 More than 5,001

Income level

Q1

Q2

Q3

Q4

0%

5%

10%

15%

20%

25%

30%

35%



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Income sources second / part-time jobs are significant as employment decreases

The most common source of income for the typical UK family is the primary income earners salary (70% - Nov 2011) although

this has dropped slightly since August 2011 (72%) as the UK experiences a 17-year high in unemployment.

While the number of families who derive income from the primary income earners job has fallen, those who see financial

contributions from part-time or second jobs has r isen from 16% (Aug 2011) to 18% (Nov 2011). Those who are married with two

or more children are most likely to have part-time or second jobs (22% - Nov 2011) which suggests that employment which fits

around family commitments continues to be in high demand.

Benefits contribute to the monthly income of more than one in five families and there has been a slight increase in the dependence

on this type of funding 21% (Aug 2011) to 23% (Nov 2011). This appears to support the theory that unemployment is affecting

some families, making them more reliant on the state.

Single parents (51% - Nov 2011) are most reliant on benefits for some or all of their familys income but this figure has dropped

from 56% (Aug 2011) potentially indicating that some of the Governments benefit reforms are having an impact.

Despite the low interest rate environment, six percent (Nov 2011) of families derive part of their income from savings or investments.

However, whether this is using the income or the capital itself is not clear. In addition to this, two percent of families say rental

income contributes to their familys finances a slight decrease from August 2011 (3%) but in keeping with the general trend seen

throughout 2011.




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Average expenditure families maintain spending as inflation soars

At a glance, family expenditure appears to have remained relatively stable over the last quarter with housing (mortgage or rent)

remaining the largest single expenditure for most families (20% - Nov 2011).

There has been a very slight decrease in the amount spent on housing, quarter on quarter (21% - Aug 2011) but this may be due to

the increasing availability of good mortgage deals rather than any other factors.

Typical family expenditure:

Type of expenditure Average amount spent as % of monthly income

Jan 2011 May 2011 Aug 2011 Nov 2011

Housing (mortgage or rent) 20% 22% 21% 20%

Food 10% 11% 10% 10%

Debt repayment 8% 10% 9% 9%

Nursery care / out of school care 9% 10% 10% 9%

Fuel and light (e.g. gas and electricity bills) 6% 6% 5% 6%

Motoring 5% 6% 5% 5%

Entertainment, recreation and holidays 4% 5% 4% 3%

Public transport fares and other travel costs 4% 4% 4% 4%

Fees for childrens activities 4% 4% 3% 3%

Clothing and footwear 2% 3% 2% 2%

After housing, food (10% - Nov 2011) is the next largest expenditure for the average UK family and the percentage of income spent

on this has remained steady for much of 2011. Debt repayments (9% - Nov 2011) and nursery care / out of school care (9% - Nov

2011) also account for a significant percentage of many families outgoings.

It is surprising that the percentage of income spent on some household expenses has remained stable, considering that inflation on

some essential costs has risen significantly. Basics such as fuel and light (+18.8%), motoring (8.7%), public transport (8.5%) and

food (6.9%) have all seen considerable increases.

However, it appears that UK families are down-shifting their spending where at all possible. This hypothesis is born out by results

from value retailers such as Poundland (+26% in profits to year ending 27 March 2011) and Aldi (profit of 18.7m on sales of

2.1bn following a loss in 2010).

Not only are families down-shifting their spending but they are also cutting spending on non-essential purchases. For example,

spending on entertainment and holidays has fallen to the lowest level in 2011 during this quarter (3% - Nov 2011).


Expenditure

This research clearly shows that UK families are working hard to maintain

their standard of living by down-shifting and economising where possible.

However, with significant inflation on some of the basic costs, we are

likely to see families cutting right down on non-essential spending.

Paul Goodwin, director of workplace savings, Aviva



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Spending trends:

In addition to tracking inflation and spending, this report also shows where UK families have stopped spending money. This provides

us with an excellent indication of both the essential fixed costs for families and also how peoples lifestyles are changing.

One fifth (21% - Nov 2011) of UK families claim they do not spend money on housing either due to owning their own home

outright, receiving accommodation through employment or being supported by the Government. This figure has remained relatively

static since August (20%) as this is an essential rather than an optional cost.

However, fewer families are spending money on luxuries. In November 2011, we saw the number of families who spend nothing

on personal goods increase to 19% (17% - Aug 2011), entertainment/recreation/holidays to 25% (21% - Aug 2011) and leisure

goods to 39% (36% - Aug 2011) - clearly a picture of a nation cutting back.

Percentage of families who spend money on this expense on a monthly basis:

Type of expenditure Aug 2011 Nov 2011

Housing (mortgage or rent) 80% 79%

Debt repayment 58% 52%

Entertainment, recreation and holidays 79% 75%

Public transport fares and other travel costs 70% 67%

Fees for childrens activities 49% 48%

Leisure goods 64% 61%

Eating-out and takeaways 82% 80%




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Savings and investments savings fall slightly as families fight to keep pots stable

The mean average amount that families have in savings and investments (excluding pensions and property) rose to the highest level

seen in 2011 (19,803 Nov 2011). This is 26% higher than at the start of 2011 (15,766 Jan 2011) and a real indication that

some families are looking to safeguard their futures as much as possible. However, this saving comes at the expense of paying off

debts, and recently it was estimated that for every pound saved, just 10p of borrowing is repaid.

However, this sample is skewed by the four percent (Nov 2011) of people who have savings of more than 100,000. The typical

family (i.e. the family in the middle of the sample) has significantly fewer savings - 967 (Nov 2011) or just 49% of the average

monthly salary. This is a two percent drop from August (982) and seems to indicate that most families are fighting hard to keep

their savings at current levels.

Almost a third (30% - Nov 2011) of families claim to have nothing set aside in savings which is a slight improvement from August

(31%) but still above the record low set in May (28%). However, the typical amount families are saving has fallen to 19 per month

(Nov 2011) the lowest amount in 2011 and a clear indication that high inflation is starting to hit home.

Percentage of families saving nothing each month

The typical divorced/widowed/separated family unit with one or more children (0 Nov 2011) and single parents (0 Nov 2011)

continue to save nothing each month. These figures highlight the fact that while some people in this group are naturally saving

something each month, the vast majority are saving nothing at all.

More worrying still is the fact that womens typical monthly savings have fallen from 16 (Jan 2011) to 4 (Nov 2011) especially

when considering that mens savings have actually risen (39 Jan 2011 to 58 Nov 2011).

The number of families who say they dont save on a monthly basis has risen to 39% (Nov 2011) from 36% (Aug 2011). This is

below the annual record set in January (40%) but appears to highlight the fact that there is a set of hard core non-savers who are

either unwilling or unable to save.


Family wealth

Type of family

%s

aving

nothing

Coupleswithout plans

to havechildren

Couples withplans to have

children

Couples withone child

Couples withtwo children

Single,raising one

or morechildren

Divorced/Separated/

Widowed withone or more

children

0

10

20

30

40

50

60



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Product mix basic accounts dominate asfamilies fail to diversify

The majority of UK families (82% - Nov 2011) have a basic bank/

building society savings account. However, as 30% of people claim

to have no savings at all, this does raise the question of how many

of these accounts are active and contain viable amounts of savings.

In addition to basic savings accounts, ISAs (36% - Nov

2011), premium bonds (23% - Nov 2011), stocks and shares

investments (15% - Nov 2011) and bonds (6% - Nov 2011) are

all used by families to build their assets.

Typically, the more sophisticated products are used by those who

have the highest incomes. For example, people in a committed

relationship who plan to have children (43% - Nov 2011) are

more likely than single parents (27% - Nov 2011) to have an ISA.

With more accessible first-time buyer mortgage deals entering

the market over the past year, we have seen increasing numbers

with this type of borrowing 45% (Jan 2011) to 49% (Nov

2011). The number of buy-to-let mortgages has also increased

marginally from 2% (Jan 2011) to 3% (Nov 2011).

Reviewing the product profile, it also appears that families are not

only trying to save in order to safeguard their futures, but are also

taking out protection products. The number of families with lifeinsurance has risen from 39% (Jan 2011) to 41% (Nov 2011) and

critical illness cover from 13% (Jan 2011) to 14% (Nov 2011).


While this latest report shows that family finances are still tight, its reassuring to

see that more people are beginning to take steps to protect their families with life

insurance and critical illness cover. While there is still a significant protection gap across

the UK, this is a step in the right direction, and we would hope that more people will

follow this trend.

Louise Colley, head of protection, Aviva



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Number of families with mortgages increases

Over half of families (64% - Nov 2011) own their own homes either with a mortgage (50% - Nov 2011) or outright (14% - Nov

2011). In addition, 19% (Nov 2011) of families live in rental accommodation and 15% (Nov 2011) live in social housing.

While the number of people who own their properties outright has remained the same since the start of the year (14% - Jan 2011),

the percentage of families with mortgages has actually risen from 47% (Jan 2011) to 50% (Nov 2011). This appears to correspond

with a drop in the number of people living in rental accommodation 22% (Jan 2011) to 19% (Nov 2011).

This move has led to more families worried about mortgage rate increases - 14% in November 2011 compared to 13% in January 2011.

However, this is a very minor increase and a vote of confidence in the belief that the base rate will remain low for the foreseeable future.

The typical family home in the UK is worth 207,190. This is 25% higher than the average UK residential property (166,256)

reflecting the fact that this population group tends to need larger properties than single people. The value of the family home hasremained relatively stable since January (207,548).

Average value of house per demographic type

While prices have remained stable, the average amount of equity has fallen from 139,218 (Jan 2011) to 132,275 (Nov 2011),

and the average mortgage has increased from 89,018 (Jan 2011) to 95,466 (Nov 2011).

Single parents are most likely out of all the groups to be living with their families (4% - Nov 2011) or in social-housing (39% -

Nov 2011). In addition, they are the next most likely to live in private rental accommodation (29% - Nov 2011), after those with

plans to have children (33% - Nov 2011).

At the other end of the scale, those who live in a traditional nuclear family (i.e. in a committed relationship with two or more

children) are least likely to live in rental accommodation (11%) and most likely to own their own home (72% - Nov 2011).

In 2011, 15% of families claimed to own a second property either a rental property, holiday home, second home or time-share.

The average value of this property was 177,415 and the typical mortgage was 135,840.


Housing wealth

Type of family

Value

ofproperty()

Coupleswithout plans

to havechildren


children



Single,raising one

or morechildren

Divorced/Separated/


children

0

50,000

100,000

150,000

200,000

250,000



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Family borrowing

Debt amounts to nearly half of annual household income

As part of the final Family Finances Report for 2011, Aviva has taken a more in-depth look at the different

types of family debt. More than half of UK families (52% - Nov 2011) have some form of debt which they

repay on a monthly basis, down from 58% in August 2011.

The average indebted family owes 10,604 (Nov 2011) which is just under half of its annual household

income (23,796 Nov 2011)*.

Those in a committed relationship with two or more children (16,428 Nov 2011) have the highest debts

while those in a committed relationship with no plans to have children (3,577) have the lowest. As those in

relationships with two or more children tend to have the lowest household income (2,178 Nov 2011) of

all two-adult families, this perhaps suggests they are more likely to use credit to maintain their lifestyle than

some other groups. The most common type of family borrowing is using credit cards (43% - Nov 2011),

followed by overdrafts (26% - Nov 2011) and personal loans (25% - Nov 2011).

Household income compared with debt

* This is not possible to compare to the previous quarter due to changes in the reporting process but does reveal a significant debt burden.

Averagedebt

Averagemonthlyhouseholdincome

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Type of family

Couples withoutplans to have

children


children



Single, raisingone or more

children

Divorced/Separated/


children



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Debt is a normal part of many

families financial management

strategies and as long as people can

service their loans, they can serve them

well. However, minimum payments

need to be maintained, or people may

find that what seemed like sensible

borrowing could become an increasing

drain on their financial resources.


When the borrowing practices of the various families are

investigated further, it appears that single parents tend to use more

informal forms of borrowing. This group is the most likely to use

doorstep lenders (9% - Nov 2011) and other informal borrowing

(9% - Nov 2011) such as pay-day loans and pawn brokers.

The group most likely to use family or friend finance are those

in a committed relationship with plans to have children

(23% - Nov 2011) potentially because they are at the start

of their careers and likely to have received some help to attain

their financial goals.

Indebted families spend 224 (Nov 2011) on debt repaymenteach month which is up from the previous quarter (218 Aug

2011). Those in a committed relationship with two children

(254 - Nov 2011) spend the most and those widowed/

divorced/separated with children (162 - Nov 2011) spend

the least.

However, the amount of money borrowed does not appear to be

a big concern to most families. In January 2011, 13% of families

said it was a concern, but this had dipped to 11% in November.



13/20

Short term fears about cost of living fall as worries about unexpected expenses rise

The top three biggest fears of UK families over the next three months are: increases in the basic cost of necessities (61% - Nov

2011), losing my/our jobs (45% - Nov 2011) and meeting unexpected expenses (42% - Nov 2011).

While consumers have learnt to live with the impact of high inflation and are marginally less worried about increases to the cost of

basic necessities (61% - Nov 2011 vs. 64% - Aug 2011), they are increasingly concerned about meeting unexpected expenses (42%

- Nov 2011 vs. 40% - Aug 2011). Low levels of saving, high levels of borrowing and the approach of winter and the festive season

are likely to be some of the drivers behind this move.

While 45% of families are worried about the loss of their jobs, a new category has revealed that 8% of families are concerned

about continued unemployment. Single parents who have the lowest incomes and are likely to feel inflationary pressure the most

are most worried about this prospect (19% - Nov 2011).

Long term concerns persist about the general economy

Significant increases to the basic cost of necessities (59% - Nov 2011), redundancy (52% - Nov 2011), and unexpected expenses

(40% - Nov 2011) remain the top worries for UK families for the next five years.

More than one in five (22% - Nov 2011) families has taken the Government warnings over cutbacks to heart and are worried aboutchanges or loss of benefits. This level has remained relatively constant during 2011 - January (22%), May (22%) and August (20%).

Single parents with one or more children (42% - Nov 2011) are the most worried about these potential changes as 51% (Nov 2011)

derive part of their income from this source.

While the high cost of living is certainly an issue for many families, the fact

that they appear less worried than before indicates that they may be starting to

acclimatise to todays economic environment.



Look to the future



14/20


Spotlight families pull together

financially and materiallyAs the tough economic climate begins to bite, the Aviva Family

Finances Report has found that 31% of families have provided

financial support to family and friends outside their immediate

family in the last year. In addition, 34% have provided practical

assistance such as babysitting, cleaning or help with cooking.

Reciprocal support:

Divorced/separated/widowed people and single parents (both

49%) are the most likely to provide practical support for their

network of family and friends. While these groups are typically

less well-off than others, they are more likely to live closer to

their families and also may need to rely heavily on their network

of family and friends at times - so it may be that in turn they are

more likely to provide assistance to others.

In addition, single parents (45%) are also most likely to

provide financial assistance. At the other end of the scale,

committed couples with no plans to have children (18%)

and those with one child (25%) are the least likely to provide

financial assistance.

Taking time out:

Help with cooking, cleaning or baby-sitting (21%) are the most

common types of non-financial inter-family support, followedby lending people items to avoid the need to purchase (8%)

and letting people live in the family home (5%).

The most common types of financial support are providing

cash to help with day-to-day expenses (26%) and paying bills

on behalf of family members or friends (9%). Providing cash for

day-to-day expenses is either via a loan (10%) or more commonly

(16%) a gift, which shows how family and friend networks are

prepared to assist those who are finding times tough.




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The Aviva Family Finances Report 15The Aviva Family Finances Report 15

Parental responsibility:

While inter-generational gifts are often discussed in the media with older parents supporting their children financially, this is not a

one-way street.

The most likely recipients of financial assistance from families interviewed for this report (whose heads are aged between 18 and 55)

are parents. This breaks down as: mother (10%) and father (7%). Children over 18 who do not live at home (7%) and sisters (5%)

are also likely recipients.

As family dynamics change and evolve, some people are more likely to financially support their friends (3%) than other members of

their extended family aunt (0.34% - Nov 2011) and uncle (0.34%). Again single parents (6%) are the most likely to provide some

type of financial support to close friends.

Financial assistance focuses on immediate family and friends:Regular contact or legal compulsion appears to be the driver behind the largest amounts of inter-family financial support be it

regular or on an ad hoc basis. Former partners receive the biggest annual pay-outs annually (1,447) followed by adult children

over-18 (1,278) and children under 18 (1,175) who are not living at home.

The importance of friendship and proximity is evident as close friends receive the next highest amount of financial assistance

(893 Nov 2011) from UK families. While UK families are more likely to help their parents than other relations, the amount

provided annually is still relatively modest mother (597) and father (588).

Triggers behind inter-family financing:

The main triggers behind this type of assistance are unexpected changes to financial circumstances (25%) and unexpected one-off

costs (21%). Help due to changes in employment (20%) or poor financial management (19%) were also cited as key reasons.

Providing assistance to family and friends who are unable to cope financially on their income is also a key reason behind giving

(16%). Women (18%) are more likely than men (13%) to provide this type of help.

Amountlent/given-

Children over 18 who

do not live at home

Children under 18 whodo not live at home

Mother

Brother

Close friends

Ex-partner

0 300 600 900 1200 1500

Typical amount provided annually by those who lend / give to family and friends



16/20


Some tough decisions:

While many people expect to provide some support to their extended network of family and friends, increasingly squeezed family

incomes make this hard. Indeed, 15% of families have made cut-backs in order that they can continue to provide assistance and

11% have been less able to support their extended family this year as they themselves are struggling.

Conversely, 10% report that they have had to provide more support than previously something that is sure to be felt keenly in

the current inflationary environment. Divorced/separated/widowed families with one or more children (13%) are most likely to have

experienced these increased requests.

Negative impact on family finances:

While it is often seen as a duty to help relations and friends if they need assistance, this can have a negative impact on a familys

own finances.

Families said that due to providing this type of support, they were less able to save (46%), repay debts (24%), put aside money for

their own children (14%) or invest in stocks and shares investments (14%).

Not only were their short-term financial plans compromised, but 11% said this familial support had limited their ability to invest in

their own pension and 10% said it had a negative impact on their property investment aspirations.

It is interesting to note that 18% of those in a committed relationship with two or more children said that supporting their family

had a detrimental impact on their pension provision. This may be because these families tend to be older and are more likely to be

focusing on this goal.

Lifetime impact:

While admittedly 442 (typical annual inter-family subsidy) does not sound a lot, this is two percent of annual household income

(23,796 Nov 2011) for a typical family rising to six percent of income (13,778) for divorced/widowed and separated parents.

Over 40 years this sum would provide a useful nest egg (17,680 excluding inflation and any interest). Indeed, this figure of

17,680 is two thirds (66%) of the typical UK pension pot (26,940 source ABI Q2 2011) which really highlights how familial

support can impact on peoples own futures.

Furthermore, over an average 40 year working life, this sum (if matched by an employer contribution in a typical workplace pension

scheme) would provide a valuable nest egg (71,757) and an income of over 3,000 per year*.


* This assumes a 25-year old male on a salary of 25k saves 442pa in a pension until age 65 (matched by employer) and takes no tax free cash at retirement.

Source www.aviva-pensioncalculator co.uk



17/20

The view acrossthe UK

Region% of people in the region

who are living in a committed

relationship and want children

% of people living in theregion living in a committed

relationship with one child

IncomeTypical

interfamily

debt

House

prices

1. East 10% 12% 1,994 498 225,5382. London 18% 21% 2,628 463 335,841

3. East Midlands 8% 16% 1,722 410 172,446

4. West Midlands 10% 23% 2,036 796 184,633

5. North East 11% 12% 1,713 299 154,365

6. North West 8% 16% 1,852 443 169,853

7. Scotland 9% 20% 2,004 420 163,235

8. South East 10% 13% 2,149 422 247,406

9. South West 9% 15% 1,862 388 207,222

10. Wales 15% 16% 1,249 408 165,313

11. Yorkshire 13% 9% 1,886 305 177,103

UK 11% 16% 1,983 442 207,190


Regional overview incomes flat andsavings down, but families look to helpeach other financially

Families in London have the highest (median)

average monthly incomes (2,628), followed by

those in the South East (2,149). They also own

the most expensive properties (335,841 and

247,406 respectively).

However, families in London also have the highest amount

of debt too (23,609). At the other end of the scale, families in Wales have the

lowest average monthly incomes (1,249), but also the lowest amount of debt on

average (3,476) much lower than the national average of 10,604.

While the average income of UK families has dropped, some regions have

seen increases: London (up from 2,477 to 2,628), Scotland (up from

1,952 to 2,004), the South West (up from 1,796 to 1,862), South East

(1,894 to 1,994) and Yorkshire (up from 1,853 to 1,886).

Families in London currently save the most each month (58), whereas

families in the North West (average 1) save the least of those who

save. Half (50%) of families in the North East say they dont manage

to save anything each month, compared with just 27% of families in

London, 34% in the West Midlands and 35% of families in Scotland.

The cost of living has had a significant impact on families in London, where

42% say that in the last twelve months, they have provided financial

support to family members outside of their immediate family. Families

from the South West (27%) and from Yorkshire (27%) are the least likely

to have provided financial support to their wider families. Typical inter-family

debt stands at an average of 442; however families in the West Midlands have proved

most generous, having provided an average of 796 to their wider family.



18/20


The final Family Finances Report for 2011 shines a spotlight on a nation of families who are

actively cutting spending to the bone. People are ruthlessly removing luxuries from budgets in

order to not only make ends meet, but also to provide additional security in the form of savings

savings pots have increased 26% since January.

Unfortunately, while the number of people who are saving has improved slightly quarter on

quarter, the amount saved has actually fallen. This is unsurprising considering that essential costs

such as fuel and light (+18.8%), motoring (+8.7%) and food (+6.9%) have seen substantial

annual inflation.

Its perhaps to be expected that almost half of UK families provide close friends and relations

with practical or financial assistance, in addition to emotional support. However it is a shock that

people are giving up two percent of their annual household income on average and over 25

years 41% of a typical pension pot

Some people are legally bound to provide financial support to their ex-partners and others choose

to help their children who do not live at home. However, in this increasingly tough economic

climate, people may need to draw a line and consider their own financial wellbeing especially

when 19% of financial borrowing is due to the recipient having poor financial management.


So what does this tell us?



19/20


Methodology

The Aviva Family Finances Report was designed and produced by Wriglesworth Research. As part of this 8,097* UK

consumers aged between 18 and 55 who live as part of one of six family groups were interviewed by Opinion

Matters between December 2010 and October 2011. This data was combined with additional information from the

sources listed below and used to form the basis of the Aviva Family Finances Report.

Additional data sources include:

Unemployment Figures Office of National Statistics October 2011

Poundland and Aldi Results companies own reporting

Nationwide September House Price Figures

www.aviva-pensioncalculator.co.uk 31 October 2011

Unbiased Q2 savings vs. debt levels September 2011

Technical Notes

A median is described as the numeric value separating the upper half of a sample, a population, or a probability

distribution, from the lower half. Thus for this report, the median represents the family who is at the utter middle of

a sample.

An average or mean is a single value that is meant to typify a list of values. This is derived by adding all the values

on a list together and then dividing by the number of items on the said list. This can be skewed by particularly high

or low values.

For further Information on the report or for a comment, please contact Sarah Poulter at the Aviva Press Office on

01904 452828 or [email protected]

* = Minimum of 2,000 per quarter



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aviva family finances report 4 - november 2011

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