12 July 2019
I must confess that when it comes to innumeracy I’m top of the class. My school of economics is exactly what I wrote about a few weeks ago – the Micawber legend about income and expenditure.
But that’s as far as is goes. And I’m glad to say I appear not to be alone. Three in ten (29 per cent) adults in the West Midlands ran a ‘deficit budget’ in the past month, spending more than they received in income, according to new research from R3, the insolvency trade body, and ComRes.
Furthermore,16 per cent of adults in the region spent up to £100 more than they received in income over the past month; eight per cent spent between £100 to £300 more; and five per cent spent over £300 more.
R3’s research follows national statistics from the ONS which show that households have been in a budget deficit for a record nine consecutive quarters (Oct 2016 - Dec 2018), while the average UK household spent £900 more than it received in income in 2017.
A quarter (26 per cent) of West Midlands adults said they do not have any savings at all at the moment, showing that levels of financial resilience are low for many people in the region.
R3 Midlands chair Eddie Williams, a partner at Grant Thornton in Birmingham, tells me: “This is a worrying snapshot of adults’ personal finances in the West Midlands.
“For some people, a month of deficit won’t be an issue, as it may be a one-off, and they may be able to cover the overhang by using savings, or borrowing. However, for others, these options will be less readily available, leading to potential problems ahead if the deficit persists.
“With our research finding that a large minority of adults currently don’t have any level of savings, it’s worth sounding the alarm about people’s ability – or otherwise – to cope with unexpected hits to their finances. Debt issues can suddenly spiral due to changes in circumstances, and overspending each month does not leave any room for saving for a significant proportion of people.
“For some, a monthly overspend is a more regular occurrence, and this group should seek advice on personal finances as soon as possible: Even a relatively small amount spent over budget in a month can add up to a much larger problem over the course of a year.”
Well, thanks for that, Eddie. Point taken but, in a way, it’s good to know I’m not alone.