Life on a low income in the UK today

Making ends meet when you have very little is extremely hard work. More than one in three families in the UK today – over two million families – have an inadequate income.

A new report by Loughborough University for JRF Falling short: the experiences of families living below the Minimum Income Standard looks at 30 families who are all living below the Minimum Income Standard (MIS). This is an income level determined by regular research asking the public what they think is required for an acceptable living standard in the UK today – including social participation as well as physical essentials. Some are managing to get by, but can’t imagine being able to stretch to a day trip or low cost family holiday. Others struggle to afford material necessities like food and school uniforms.

New hazards and uncertainties, such as zero-hours contracts, payday loans, less stable housing situations and benefit changes have made life precarious, risking more severe forms of deprivation for some. Even when working, many families are struggling to meet their needs and keep up with social expectations. A crucial factor is stability: those with unstable jobs, insecure housing or fluctuating benefits are far more vulnerable than those on a more even keel. Being able to fall back on the support of extended family is also critical, with grandparents helping to look after young children while parents work and sometimes paying for things like holidays or children’s activities, or helping out financially in a crisis.

The research, which is part of JRF’s strategy to solve poverty, found that the experience of families is varied. Summarising the experiences of low income among participants in the study, in terms of how well they are coping and whether things are improving or getting worse, they can be divided into four broad groups: getting on, getting by, getting stuck and getting harder.

Getting stuck and getting harder

Life on a low income means hard choices for many families. Karen and Ben* live with their children aged three and seven. Ben works full time and the family receive tax credits. The couple have a fairly low mortgage, but are constantly struggling to meet household bills, at the same time as paying around a quarter of their income on child maintenance and loan repayments. 

“We really do struggle on a weekly basis to even survive some weeks”, says Karen. “Some weeks, like the last week of every month we are flat broke. We’ll have beans on toast because we’ve spent money on the kids. We got ourselves into a little situation of borrowing all the time because before we got insurance out on the boiler, the boiler was constantly packing up. My husband’s car kept breaking down or the kids needed some new clothes. At the minute my son has clothes that are two or three, and he’s nearly four.”

Many people like Karen and Ben are getting stuck in a situation where they find it hard to keep afloat. Some of these families are dependent on borrowing, and can’t see an immediate way of improving their lives. They spend a lot of time juggling resources, but still end up going without. Factors that make coping on a low income more difficult include higher outgoings on items such as rent or debt. Some have seen things go wrong, in their own lives or others’, and this makes them highly risk averse. This can mean, for example, preferring a prepaid electricity meter, even though it costs more, to the uncertainties associated with facing a large bill or risking direct debit payments that might bounce or wipe out their bank accounts.

For some families, ill health or disability – either among parents or children – is a big factor. Parents’ own physical and mental health can restrict their ability to earn – with some unable to work at all – while others needed more time off than usual. Children’s health impacts on parents’ earning ability, with frequent hospital visits, appointments with professionals or trips to school and school exclusions taking priority. Parents in these circumstances don’t feel they can take on a job given all the extra responsibilities, or have drastically reduced their hours to help cope.

Illness and disability can have a big impact on family income.

Louise and Ian* live with their children, who range from toddler to secondary school age. Ian had to stop work because of his health some years ago, so the family’s only income is from benefits. Louise and Ian’s life revolves around the children.

“If there’s a last bit of food left in the freezer I will go without and let the kids have it”, says Louise. “Any money we've got left over from the food shopping, if they needed anything it goes straight on them.” Louise had recently needed new shoes, but then decided against it when she thought of other expenses coming up. “We had one birthday yesterday and another on Monday so it just got to me then.”

Ian and Louise never go out socially together, as any outings are as a family and for the children. “You can’t really go out [as a couple] and have kids at the same time” says Ian.

For other families in the study, life was getting harder and their finances overwhelming them. Families in these situations risk not being able to afford the basics, such as food. Some have made unsuccessful attempts to make finances add up after a family separation - for example trying to afford mortgage payments on one income. Others are trying to get to grips with accumulated debt, including high-interest sources such as doorstep lenders or instalment buying. Unsecured household debt in the UK is reaching a record high, and more and more people are borrowing just to pay the bills.

Unsurprisingly, the parents in this study are prioritising the basic necessities of life – food, warmth, shelter and good health. Where these basic needs are at risk, parents are taking the strain, sometimes neglecting their own diet or not buying themselves new clothes so that their children have enough. Some families face real material hardship such as inadequately heated or damp homes; others can’t afford to pay for other things like after school activities. Parents are also consistently sacrificing their own social needs: many can’t remember when they last had a night out.

Relationships between partners can be severely tested by the experience of living on a low income. Some parents talk of how money worries are a cause of tension, for example, where couples have different attitudes to money and budgeting, but valued pulling through tough times together. Many spoke of mental health difficulties such as anxiety and depression, which can make it harder to deal with the considerable demands of budgeting on a low income. It can be tough dealing with the demands of budgeting on a low income in such circumstances. And it doesn’t necessarily end there: other evidence shows that children from the poorest families are four times more likely than rich ones to experience several mental health problems growing up.

Getting on and getting by

Among parents in the study who felt that they were coping, a few do see their lives as getting better and they are moving towards a better living standard.  These families are in a relatively secure situation with a steady income and no debts, and are actively getting on, for example through saving, buying a house or taking up education opportunities.

Families who are getting on generally have stable, reasonably paid employment and don’t need to pay for childcare. This is sometimes helped by the availability of extended family, both to help look after children and giving significant financial support such as a deposit to secure a mortgage. Even for those whose lives are not improving generally, grandparents can provide crucial financial support. In some cases, they help out when there is a crisis. In others, their help prevents children missing out on valued aspects of growing up – paying for a holiday or an after school activity that their parents can’t afford.

Many families on a low income rely on financial and childcare support from grandparents

Such extended family support is common among the group of parents who are getting by. While their income is not improving, this group is making ends meet pretty well – although this involves hard work and disciplined spending. Parents are highly organised to cope well: juggling payment demands, comparing prices, seeking out discounts and carefully managing their budgets. They are generally in a stable position; a few have become lone parents in recent times, but any temporary crisis that this caused in their financial situation had been sorted out.

Angela* lives with her primary school aged children. Her income has drastically reduced since splitting from her husband, and she stopped working due to her health. Nonetheless, Angela feels that she is managing well: she is on top of her bills and is able to ‘squirrel away’ a little money for emergencies. This is mostly due to her organised budgeting and resourcefulness. She controls her finances tightly and can account for every penny – she receives her benefits weekly, uses prepayment meters and spreads out her bill payments. She finds internet banking and using a debit card helpful so she can keep track of her spending and the money she has available. Angela describes herself as a ‘bargain hunter’; she knows which shops are best value for different goods, and uses the internet to pick up cheap deals. She stocks up on special offers, buys and cooks food in bulk, and stores meals in the freezer; as well as being cost effective, this means that if she was ever short of money she could still provide a good meal for the family. Angela is proud of being disciplined with her spending and only buys what she thinks she can afford. She has had a loan in the past, but now would rather save up to buy things outright as using credit would be a last resort for her.

Angela’s situation illustrates how some people on low incomes are able to keep up with household bills without getting into arrears. Not all the families we spoke to have always been in this situation – a number of those getting by have managed to clear (sometimes substantial) debt, and changed their attitude to money so as not to repeat the experience. A few sometimes use a catalogue retailer for a large purchase or have a credit card, but are able to pay it off rather than get into debt. Some would like to be able to afford occasional treats, and feel that they would like to spend more on things such as holidays, activities, trips for the children and in some cases on a car. Another parent who isn’t working and is raising a family on her own spoke about “Just being able to go shopping and not stress. You know my big dream at the moment – and it is the smallest thing - just not having to calculate every single thing and how much it's all adding up to. It's nothing to some people and you walk round the supermarket and you see these people with Finest this and Finest that and the best of and you think I just want one of them just to try it, but the only way I'm going to get to try that is if it's reduced of an evening and I get there at 7.00pm and beat every other bugger else to it… I want my ability to be able to shop and not have a migraine by the time I come out the other end from having to be a mathematician.”

The expense of Christmas and birthdays is a common concern among families in the study. While Christmas is seen as a really important time for children, the financial stress this puts on parents is evident and they talked about it as a source of ‘dread’ and ‘stress’. People plan way ahead, buying presents throughout the year if they have any spare money or spot a bargain. Some use supermarket loyalty points, save loose change or put Child Benefit into Christmas vouchers. However, for others, borrowing to fund purchases means that the impact on budgets kicks in afterwards. Catalogues, buy now/pay later or Provident loans are used as a form of funding, and viewed as a mixed blessing – a ‘godsend’ until the money has to be paid back and then ‘oh God, why did I do that?’

Birthdays and Christmas are a time of stress, with many parents making sacrifices to provide for their children.

The difficulty for some families is that there is just not enough money to go around. Parents feel demoralised, with nothing left to cut back on. They have little sense of control because as fast as money comes in, it goes straight out again with nothing left.

Having no financial back-up means if there’s an unplanned expense, it throws a spanner in the works. Funding an MOT or car repairs, replacing large household goods if they break down, or dealing with an emergency can be problematic and not easily met from the day-to-day income. In these situations, families have to borrow, use catalogues, overdrafts or credit cards, or try to juggle their budget and payment of other bills – which can mean reorganising a whole system of finely balanced finances.

So how can we provide stability for these families?

The causes and effects of a low income cannot be solved overnight. Above all, parents want to be able to provide their children with a feeling of ‘normality’ – a basic standard of living that they can rely on. Yet four out of five low-paid workers remain stuck in low pay after 10 years. The problems faced by low income families don’t disappear when they enter work: tax credits are essential in making ends meet for working families.

This research shows how policies which help address low family income need to aim for greater stability in four key areas. Families need stable jobs, with steady earnings that they can rely on. Where earnings remain low and the state helps out, or where people can’t work, they need benefits that they can guarantee will not be reduced or taken away. In meeting their housing needs, they require the security that has been provided by social housing and which at present is often lacking in the private rented sector. Finally, they need reliable and affordable childcare, so that if help from extended family is not available parents are not preventing for working. Support in these four areas would go a long way to providing the stability that these two million families below the Minimum Income Standard crave – so they can get on, rather than simply get by, in modern Britain.

JRF’s strategy to solve UK poverty is being launched in September. It recommends a plan that boosts people’s incomes by making work pay, and making housing and childcare more affordable. A plan that ensures our education system gives all of our children the best start in life and ensures they have the skills they need to get well-paid jobs with opportunities to progress. A plan that promotes long-term economic growth that benefits everyone. A plan that supports families to stay together, and communities to help themselves. By working together with vision and commitment we can take start to create a prosperous society built on decent living standards and opportunities for everyone to fulfil their potential. You can follow our progress at www.jrf.org.uk/solve-uk-poverty