Boost your family income

The pandemic has financially impacted the majority of UK households, and with unemployment on the rise and the furlough scheme extended, making your family income stretch has never been more important.

Whatever your current situation might be, there's a lot that you can do to take control of your own finances. From getting a better understanding of your disposable income to planning fun and free days out, here are some things every family can do to make the most of their income.

The pandemic has financially impacted the majority of UK households, and with unemployment on the rise and the furlough scheme extended, making your family income stretch has never been more important.

Whatever your current situation might be, there's a lot that you can do to take control of your own finances. From getting a better understanding of your disposable income to planning fun and free days out, here are some things every family can do to make the most of their income.

Anelda Knoesen
From the Money team
11
minute read
Do you know someone who could benefit from this article?
Posted 13 APRIL 2021

What is the average family income in the UK?

According to the Office for National Statistics, the average annual household income in the UK, during 2020, was £29,900. That may well be the average, but many people have had their salaries reduced or cut completely since March 2020.

What is a low family income?

A family has relative low income if their equivalised income is below 60% of median income. This means that, currently, a disposable income of £17,940 qualifies as a low family income.

How can I better understand my family income?

Whether you’re still working or have been furloughed or made redundant, if you want to take control of your finances, start by getting a good understanding of where your money goes each month, and how much you have left over after all the essentials have been paid for. Your essentials include things like rent or mortgage repayments, bills, travel and groceries.

We’ve taken a look at the average income and disposable income of households around the UK to get an idea of how they vary by location. We've also used the average cost of non-essentials like dining out and sports and leisure in each area to work out how much, on average, households in these towns and cities could afford to save each month after everything is paid for.

Areas in the UK with the highest disposable income

As you might’ve expected, disposable income varies enormously depending on where you live. On average, people in Reading have the most disposable income, followed by Milton Keynes, Swindon, Cambridge and Warrington.

While London has the highest average household income, it also has the highest essential and non-essential outgoings, meaning that on average, people in London are unable to save anything at all each month.

The biggest savers, on the other hand, live in Reading, Peterborough, Gloucester and Warrington, where disposable outgoings are well below £1,500 a month.

If these figures look completely alien to you, don’t despair, as there are many areas where average income, disposable income and monthly savings are significantly lower.

What’s more, 36% of UK households have not managed to save any money at all since the first lockdown was announced in March last year.

Areas in the UK with the lowest disposable income

Glasgow, Blackpool and Dundee are the areas with the lowest average disposable income, but thanks to lower costs of non-essentials like dining out and childcare, all three areas still manage to save each month.

This applies across the board, as out of all 20 areas with the lowest disposable income, only Nottingham is left in the red after all essentials and non-essentials are paid for.

With clever budgeting, it can be possible to make your money go further each month.

How to budget family income

Your financial situation may have changed in light of recent events, but no matter how much or how little disposable income you have, there’s a few things that you could do to try to make your money go further as a family. A third of households in the UK have taken steps to cut down their household expenditure during lockdown, and all it takes is a little extra effort. Here are five tips for how to budget family income:

1. Reduce one cost from your everyday lives 

If you look through your monthly outgoings, you’ll probably find something that you don’t need anymore. Whether it’s a membership for a gym you’ve not visited for a while, one too many streaming services, or a TV bundle that has add-ons that you didn’t even know about. Try to remove one (or more!) of these unnecessary things from your life, and you’ll save money on something that you might not even miss.

Try the ‘Your Bills’ section of our Compare the Market app, which can link your accounts and bills to give you greater visibility and control of your money. It also allows you to track your spending by monitoring any changes, and shows you where you can save.

2. Save on your weekly shop

Lots of supermarkets offer loyalty and reward schemes. Things like the Tesco Clubcard or Sainsbury’s Nectar Points allow you to build up rewards simply by shopping as usual and collecting them each time you shop.

Morrisons also offers their Savers Stamps scheme, which allows you to buy stamps throughout the year, which will then add up to help you budget for something like your Christmas shop, which we all know can be an expensive one!

You’d be surprised at how much you can save by planning your meals more. If you have a plan for the week, you can buy ingredients that’ll go further, rather than buying for each individual meal.

You can also get smarter on how and where you shop. Switch big names for own brands to make lots of small savings that can really add up. Meanwhile, shopping at one of the value supermarkets like Aldi and Lidl can see you make further savings.

3. Fun, but cheap days out 

A great way to budget, without sacrificing days out, is to take advantage of schemes like a National Trust membership, or a Merlin Pass. After one payment, you’ll be able to make the most of dozens of fantastic venues around the country, as many times as you like. Some schemes also allow you to pay monthly, if you’d like to split up the cost.

And of course, with qualifying purchases with Compare the Market, you can make the most of our Meerkat Meals and Meerkat Movies, which allow you to enjoy great days out at Meerkat Meals rates.

Sometimes the best things in life are free, and there are loads of things to do as a family across the UK that prove just that. Take a look at Trip Advisor or Visit Britain and you’ll find lots of fun activities in your area and further afield.

Top 10 attractions to visit for a free day out

We’ve analysed more than 1,700 free attractions in the top 50 most populated towns and cities in the UK to find out which are the best of the best, based on 5* reviews.

From museums and historic landmarks to beaches and walking trails, these are the top 10 free attractions in the UK.

Swansea’s picturesque landscapes feature three times in the top 10 list, so plan a summer day trip there if you’re close enough and tick all three off at once.

For a day out in the winter, loads of museums and historic landmarks are free to visit, and two of the top rated are the Jet Age Museum in Gloucester and the Bolton Steam Museum.

Why not check out your local museum or art gallery? You might be surprised by how much fun you can have in your very own town or city.

The top 20 towns/cities to visit with the most 5* free attractions

We’ve unveiled the top free attractions around the UK, but which cities have the most 5* free attractions? Family days out can be expensive, but in these towns and cities you can easily spend a whole day exploring while spending no more than the cost of travel and refreshments.

It might not surprise you that London has the most 5* free attractions, with options for all the family, from educational hotspots like the British Museum and the National History Museum to iconic green spaces including Hyde Park and Regent’s Park.

For anyone looking for a day trip in Scotland, Aberdeen is the second-best city in the UK for 5* free attractions, with highlights including the Aberdeen Maritime Museum, Duthie Park Winter Gardens and Brig ‘o’ Balgownie.

And next up is Liverpool, where you can spend the day exploring the Museum of Liverpool, Sefton Park and the Walker Art Gallery (plus 20 more free attractions if you work fast!).

Remember to factor in the cost of travel and refreshments on your day out, bear in mind the latest government guidelines, and take a look at TripAdvisor yourself to find 5* free attractions in your area.

Let’s look at what else you can do to budget your family income.

4. Try a staycation 

Turn your overseas holiday into a staycation! While it’s great to discover new countries, there’s plenty you probably haven’t seen right here in the UK. If you’re living in London, why not escape to the Peak or Lake Districts, to walk amongst nature, or, if you’re out in the countryside already, why not explore some of Britain’s great cities and some of the 5* free attractions we highlighted above?

A great way of budgeting as a family, especially if funds are tight, is to trade a holiday abroad for a staycation. Swap flights for a tank of petrol and you’re already saving. Put that together with a great deal on a home rental with a service like Airbnb and you can save even more. If you wanted to go even further, why not save by shopping for food and other goodies when you arrive, rather than spending on expensive meals out?

5. Be aware of your spending 

While you’re looking at your monthly outgoings and working out how much money you have left after you’ve paid for essentials, take a look back at your recent bank statements and see where your disposable income typically goes. Try and set limits on the things that aren’t truly important, like buying lots of clothes or eating out so much.

How to save more money as a family

As well as budgeting, you can also increase your income by being savvy with the money you earn. Here are five tips for how to save more money as a family:

1. Get smart with your annual salary

Some people don’t know that if you’re already married then you could qualify for the Marriage Tax Allowance, entitling you to a £250 tax relief if one of you is a non-tax-payer (usually because you earn £12,500 or less) and the other is a basic 20% taxpayer, earning less than £50,000 (£43,430 in Scotland).

The earner who has any unused tax allowance can transfer £1,250 to their partner, who can then claim that money as part of their own tax-free allowance. In other words, if you’re married or in a civil partnership, and one of you earns £12,500 or less, then transfer £1,250 to the higher earning partner and save £250 a year in tax.

2. Consider taking on some out of office hours work

There are two tax-free £1,000 allowances – one for selling goods or providing services, and one for income from property you own. Whether it’s babysitting, gardening, or perhaps the catering or bar work at a yearly event, those who do a little additional work on top of their primary job are allowed up to £1,000 a year tax free.

Around 15% of the workforce in the UK now work for themselves full time or part time. For the odd bit of freelance work, sell your skills through sites like Fiverr or Taskrabit.

3. Make your savings work for you

Savers can collect up to £5,000 in interest from their savings totally tax free, if they earn £17,500 or less. For every £1 of income above your Personal Allowance (currently £12,500), your starting rate for savings will drop by £1. This is by income not household, so switch your savings to the lower earner. ISAs of up to £20,000 are also tax free.

4. Make that pension pot work for you 

By getting a stakeholder pension. If you were to invest £100 a month (£1,200 a year) into your personal stakeholder pension, then you would receive £240 totally-tax fee over the course of the year, based on a basic rate tax payer rate of 20%. A higher rate taxpayer can claim an extra 20% tax relief via their self-assessment forms.

5. Take control of your outgoings

One of the best ways to save money is to review your household bills, as well as any other financial commitments you’re tied into. You might be surprised to find out how much you could be overpaying, simply by not paying close enough attention to your outgoings. In July 2020, 30% of parents with children at home found it difficult to pay their bills, but by reviewing what you’re spending, you might be able to make things that much more affordable.

With Compare the Market, you can easily check to find out if you could save money on a whole range of products. Are you paying too much for your energy? Many people have slipped onto variable-rate tariffs, which are typically the most expensive. What about your broadband? You might find that you can save money, and even potentially get a better service.

And then there are your insurance providers. You may have a combination of car, home and pet insurances, which are an ongoing expense for your family. If you fail to keep up with them, you can quickly be paying far more than you need to. By using a price comparison site like Compare the Market, you can quickly see if you can get a better deal elsewhere and save money.

Another way you and your family could save money? By comparing deals, on your loans and savings accounts, right here.

What is family income benefit?

Family income benefit is an option for a life insurance policy. It allows you to amend the policy to pay out in the form of regular sums, instead of one large payment. This allows the policy to act as a replacement income for the policyholder’s beneficiaries. This may be more suited to families who rely on a steady and regular income.

Methodology

Disposable income areas – Average household income was sourced by gov.uk, gov.uk for 2018. Average essential outgoings were sourced from gov.uk for rent, electricity and gas, from water.org for water consumption, propertydata.co.uk for council tax, and cable.co.uk for broadband. Estimated costs for groceries and travel were sourced from Numbeo and Statista. This data, together, provided an estimation of essential household outgoings.

Disposable expenditure includes estimated costs associated with childcare, dining out, sports and leisure and clothing, sourced from Numbeo. This was used to calculate an estimated cost of disposable outgoings.

The data is ranked by the highest disposable income, this was calculated by subtracting the household essential outgoings from the total average household income.

Estimated savings were calculated by subtracting essential outgoings and disposable outgoings from the total average household income.

Free days out – The 100 most-populated UK towns and cities were selected based on population data from thegeographist.com. Trip Advisor data was analysed to produce a list of 1,777 free attractions/things to do in these areas. The data was filtered to only include attractions with an average review score of 4.5* or 5*.

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