According to the research from moneysupermarket.com, 30% of Brits say their monthly outgoings would have to increase by under £100 before it became impossible to meet every day living costs.
The ‘affordability tipping point', where the cost of day to day living becomes so high that consumers can no longer stretch their finances to make ends meet, has already been reached by some Brits. Almost a quarter (22%) say they wouldn't be able to cope if their monthly expenditure was stretched any further, as the cost of living has now become too high for them.
The research further revealed that four in ten adults (40%) say the soaring cost of petrol, which has already seen a litre rise to above £1.33 for the first time ever, has had the biggest impact on their spending and budgeting over the last 12 months. A quarter (23%) of adults say it is the rising cost of food and two in ten (19%) say it is the rising cost of paying for utility bills such as heating which is causing the biggest strain.
In the last six months alone, UK adults say their weekly outgoings have risen by an average of £54, and they are surviving on just £247 a month after all bills and outgoings are paid for. However, with disposable income forecast to fall by a further £780 per cent this year, consumers finances look set to be stretched even further before there is any let up.
Not only are consumers battling the rising cost of living and a reduced level of disposable income, they are also contending with lack of pay rises at the same time, which means in real terms, incomes are being reduced. More than six in ten adults (61%) say they have not had any form of salary increase in the last year. The knock-on effect has been a greater need to budget to make sure all bills can be paid, with 77% of adults now saying they have to budget every month to make ends meet. This rises to 83% of adults who are parents or who have children under the age of 18 who are financially dependent on them.
The stretch in finances and limited access to disposable income has clearly had a detrimental effect on how UK adults are feeling about their future. Nearly four in ten (38%) say they are worried because they are unable to save any money and they have reached the point where they can budget no further. Over a quarter (28%) say they are stressed while one in ten adults (10%) loses sleep over the state of their finances. This jumps to 17% for parents or adults with children under the age of 18 who are financially dependent on them.
Whilst there is mounting speculation of a summer base rate hike from its current historic low of 0.5%, a third (33%) of adults say they would welcome this as they would benefit from an increase in returns from savings. However, at the same time, almost a quarter (22%) of adults are worried that any base rate hike will automatically be passed on by mortgage providers, and monthly payments will begin to rise.
Clare Francis, personal finance expert at moneysupermarket.com said: "2011 is set to be another tough year for many households, with finances continuing to be pushed to the max. People should be reviewing all of their outgoings as a priority to see where they can get better value and free up vital cash."
