The average income for a British family with two adults working is £40,000 a year, according to the Office for National Statistics. But while some feel well-off on this sum, for others it is a daily struggle.
Kate Golding, a nurse living in Bristol with her partner Jai Rossiter, an electrician, says they feel 'comfortable and stable' on their combined income. They own a £300,000 detached house, two cars, and spend £10,000 every couple of years on a new vehicle. Kate has no debt and says she manages her money well, unlike many of her friends.
In contrast, Monica and Bryan Adams of Bournemouth describe their finances as 'tight' and 'draining'. They owe £360,000 on their £310,000 house after their cafe business failed, leading to bankruptcy. Their income, including tax credits and lodgers, reaches the £40,000 average, but they avoid spending on luxuries like shop-bought pizza.
Financial expert Alvin Hall notes that £40,000 sounds like a lot but is less after tax. He says priorities are key: 'If you want your kids to go to private school you can't do that on £40,000.' Paul Lewis of BBC Radio 4's Money Box adds that debt problems arise when spending exceeds income, regardless of earnings level.
The 2011 Family Spending Survey shows households spend most on transport, rent, fuel, and recreation. Spending on education and housing has risen, while clothing and restaurant spending has fallen. Average household debt, including mortgages, stands at £55,795, according to Credit Action.
Location also matters: in London, the average house price is £440,230, compared to £88,163 in Blaenau Gwent, Wales. Monica Adams says bankruptcy has taught her to manage money, but it's 'not as fun as slapping down a bit of plastic'.
