aviva family finances report 4 - november 2011
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8/3/2019 Aviva Family Finances Report 4 - November 2011
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The Aviva FamilyFinances ReportAutumn - 2011
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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
2. Living in a committed
relationship with plans
to have children
3. Living in a committed
relationship with one child
4. Living in a committed
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.
The Aviva Family Finances Report 3
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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
The Aviva Family Finances Report 4
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.
The Aviva Family Finances Report 5
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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 possi