Financial friction: what Brits are learning about budgeting

The British economy has been through an extremely sensitive time these last few years. Not only has consumer confidence in public spending dwindled greatly but prices across the board have risen substantially.

The debt of British citizens is becoming increasingly more worrying. As of March this year, according to independent financial watchdogs, 372 people are declared bankrupt every single day of the year. This staggering figure equates to 1 person per minute throughout the hours of a working day. It’s a serious problem and the levels of debt accrued by the general public total over £208 billion.

Below are a few reasons for these figures and what the British public has begun to do in an attempt to combat personal debt:

Cost of living

Prices for essential items and overheads have rising significantly in the last few years. Food prices have seen a dramatic increase and where it was once possible for two people to spend an average of £35 a week on food, this figure has risen to around £60 for modern shoppers.

Similarly, private rent in an unregulated market has risen to dramatic proportions. The cost of transport has also risen across the board; from the London Underground system to small town busses and the prices of fuel for car owners, all of these expenses have reached an all time high.

These costs are unavoidable and to combat them many individuals have begun to take steps such as searching for new current bank accounts, which offer better rates of interest, or even seeking additional forms of income.

Financial planning

Planning and adhering to a financial plan has also become the daily routine of many people. Financial plans in everyday life are essential for identifying costs and the percentages of an income which must be dedicated to them. Writing down your finances will not only allow you to plan and budget accurately but will also allow for more freedom with any remaining disposable income and work to ensure that debt is not accrued steadily.

IVAs

Those individuals who are in serious debt due to credit cards, lapsed payments and rapidly accrued interest charges have also begun to seek a variety of positive means to rid themselves of this problem. One of these methods is through an IVA.

Last year, the amount of Individual Voluntary Agreements taken out by individuals was just under 11,000, meaning that it is gaining a great deal of credence as a way of wiping out debt in the long run.

An IVA with Harrington Brooks, for example will work with you to freeze interest and agree upon a repayment sum to ensure you will attain a debt free status over a period of around five years. The statistics for people taking out IVA’s is set to rise again over the next year, with the amount of debt for existing consumers with an IVA radically reduced.