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Boost your family income

Boost your family income

There's loads that you can do to take control of your own finances. Here are some things every family can do to make the most of their income.

Anelda Knoesen
From the Money team
4
minute read
posted 27 MAY 2020

What is the average family income in the UK?

According to the Office for National Statistics, the average household disposable income in the UK, in 2019, was £29,400.

What is a low family income?

A family has relative low income if their equivalised income is below 60% of median income. In the UK, in 2019, the median household disposable income was £29,400. This means that, currently, a disposable income of £17,640 qualifies as a low family income.

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.

How to budget family income

There’s plenty that you can do to make your money go further as a family. All it takes is a little extra effort. Here are five tips for how to budget family income:

1. 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. There are also schemes for paying them 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 two-for-one rates!

2. Cut one thing from your 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 spend by monitoring any changes, and show you where you can save,

3. 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. 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.

4. Try 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 like London, Manchester and Glasgow?

A great way of budgeting as a family, is to trade a holiday abroad for a staycation. Swap four 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 - Take a look at your monthly outgoings, and see where your money really goes. What are the essentials, and what are the luxuries? Try and set limits on the things that aren’t truly important, like buying lots of clothes or eating out so much. You can find plenty of budget apps to help track your spending, while you could also try paying more with cash, which can help you see where your money goes.

How to save money as a family

As well as budgeting, to make your money go further, there are ways that you can save on a whole range of essntials. You can also increase income by making your money work for you. Here are five tips for how to save money as a family:

1. Get smart with your annual salary - If you’re married, the Marriage Tax Allowance, could save you £250 if one of you is a non-tax-payer (usually because you earn £11,250 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 are married or in a civil partnership, and one of you earns £11,250 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 income from property you own. Babysitting, gardening, 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 16% 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.

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.

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