Families need over £36000 for Acceptable Standard of Living

The Joseph Rowntree Foundation has published a report on the minimum income require for an acceptable standard of living. This is not based on the bare minimum required but what is required for a “socially acceptable” standard of living which includes being able to afford certain things that are not considered essential. This includes a UK holidays once a year, mobile phones and occasionally going out to eat. They cover two examples: a couple with children and a single person.

The findings of the Joseph Rowntree Foundation’s report were that a couple with two children needs to earn £36,800 between them to achieve this standard while a single person needs to earn £16,400. At present 25% of people are in a situation where they earn below this amount. The report concluded that a couple with two children with both parents working full-time have to earn fifty-two percent more than the minimum wage to reach this income while a single person needs to earn thirty-six percent more than the minimum wage. These figures are an increase on the same survey carried out in 2008.

There are a number of trends that the Joseph Rowntree Foundation has highlighted from their research. Some of these are below:

Parents are spending less on Christmas and Birthday presents and buying certain things, such as bikes, second hand.

People are still going out to eat but less often and more cheaply.

Activities for children, such as swimming, are still important to families but while it was previously a weekly activity it is now more often a monthly activity.

People are more likely to need a car. While this may seem strange if people are struggling this is actually becoming more essential because the cost of public transport is rapidly increasing. Bus services are also becoming less sufficient and more inflexible so are less likely to meet people’s needs.

A couple with two children is the example that has been particularly focussed on in the media, with increasing childcare costs being highlighted. This is said to be £148 a week on average. According to a BBC report some of the other increasing costs for families have been for meat (£18 a week), vegetables (£11), social activities (£30), saving for a UK holiday (£19), running a car (£60) and public transport (£12). These are averages with this data varying from one family to another.

What does this report tell us? It tells us that costs are increasing despite the current state of the economy. This means that some are experiencing lower incomes (or no income at all) while their costs are increasing. Both individuals and families need to earn more (even once inflation has been taken into account) than they did in 2008 to reach the same standard of living. For those with children childcare is the cost that has increased the most, and a parent with one child working full-time on minimum wage is only effectively earning £4,000 a year after tax, national insurance and childcare is paid.

Andrew Marshall ©

For information on helping your children financially once they become parents visit Junior ISA.