Families cut spending to save cash

3 April 2008 12:00am

Middle income families are cutting spending and taking on second jobs in a bid to ease the financial strain they are under, research has shown.

About 72% of households with an annual income of £30,000 or more said they will take steps to cut their spending this year, according to insurer AXA.

At the same time, 15% said they will either be forced to get a second job or send a member of the family not currently working out to work to make ends meet.

One in five people will also stop saving or cut their pension contributions, with 30% of people saying they do not have enough money left at the end of the month to save. 15% blame their cashflow problems on high house prices and the same proportion blame them on debts.

About 44% of people plan to eat out less, 21% will cut back on socialising and 8% are considering not renewing insurance cover.

AXA plans further research in the next 12 months, looking at the financial issues facing higher-than-average income families.

The research comes after Bank of England figures showed that consumer borrowing through credit cards, overdrafts and loans soared to its highest level for more than five years during February.

Steve Folkard, AXA spokesman, said: "It's no wonder that households with above-average incomes are struggling to cope.

"A typical family in Middle Britain may have a higher than average income but millions are weighed down by high lifestyle costs and face tough choices as the strain on their finances takes its toll.

"One of the biggest issues however is that many seemingly well-off households lack the motivation to tackle their problems. We've had it easy for so long and been happily spending without thinking of the consequences that now people aren't sure what to do."

© The Press Association