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9.7million households face Christmas on reduced income

A new study by GoCompare reveals that 9.7million households are facing Christmas on a reduced income, compared with this time last year, with 13% saying that Christmas is going to be financially very difficult indeed.

The research carried out ahead of the festive season, found that 35% of UK households are living on less money than last year. 54% said their household income is roughly the same, while 11% have seen their income increase in the last 12 months.

The financial impact of Covid has hit the household income of adults aged 18 to 44-years old the hardest. Nearly half (49%) of those aged 18 to 24-years, 48% of 25 to 34-year olds and 43% of 35 to 44-year olds have seen their income drop – compared with the average figure of 35%. At the other end of the scale, the household income for people aged 65 and over has stayed stable with 73% saying it is about the same as this time last year. Only 14% of people in this age group said they had experienced a drop in income.

The squeeze on household budgets will see over a third (34%) cutting their Christmas spending. A quarter of respondents said they ‘will have to be very careful with money this Christmas’. Worryingly, 8% admit they are going to be spending money they haven’t got, to spread some festive cheer this year.

When asked about how they will pay for their Christmas, 52% plan to do so from income, while 30% have saved money throughout the year for their festive spending. Credit cards will account for 16% of spending. Some (5%) of those surveyed said they would borrow money to cover the cost of Christmas, while 5% admitted that they will probably go overdrawn.

Lee Griffin, CEO and founder of Gocompare Money said: “Lockdown and other restrictions aimed at halting the spread of the coronavirus have plunged the UK into recession, leaving millions of households struggling to manage on reduced incomes. On top of everyday money worries, Christmas is adding to the financial pressure on millions of households.

“If you are struggling to make ends meet, don’t ignore the problem in the hope it will go away. There is financial help available. Check to see what Government benefits you are entitled to and find out how to access them. And, if you’re having difficulty in making bill payments or repaying loans, contact the relevant organisation as soon as possible to make more affordable arrangements.”

Lee added: “You can also give your finances a much-needed boost by shopping around for the best deals on your weekly shop, energy bills, insurances, credit cards and broadband deals. There are some significant savings to be made. Using a comparison site, like GoCompare, can help stretch your household finances by making it easy to compare. And providers constantly review their pricing, so even if you think you’re currently getting a good deal on your financial products it’s worth shopping around on a regular basis.”

GoCompare customers could save up to £288 on their energy bills, £277 on their car insurance and £107 on their home insurance

If you are experiencing financial difficulties, don’t ignore the situation. Take action as soon as possible:

  • Draw up a budget based on your income and outgoings and stick to it.
  • If you are still earning and just need to cut the cost of essential services and insurances, shop-around for a better deal.
  • If you are facing significant financial difficulties, talk to your mortgage provider or landlord as soon as possible to agree a payment holiday or a new repayment plan.
  • Speak to your current insurer and ask them what they can do to help in terms of reducing or deferring premiums.
  • Talk to your bank about an agreed overdraft and an interest-free overdraft buffer and check with your credit card, loan or car finance provider to see what help is available in terms of a payment holiday or a new repayment plan.
  • The Government has made it easier for people to access benefits and claim sick pay. Check what benefits you could be entitled to.
  • Seek free debt advice from the Money Advice Service online, at https://www.moneyadviceservice.org.uk/en

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