How much money do you actually need to live off?

£10,000? £20,000? £30,000?

Have you ever thought about how much money you actually need to have a decent standard of living?

The Joseph Rowntree Foundation (JRF) has worked out the Minimum Income Standard (MIS) for 2018.

This is based on what the public thinks we all need for an adequate minimum living standard – including food, travel, rent, energy bills, childcare and more.

What do you need to live off?

  • A single adult needs £18,400 before tax and benefits
  • A single parent with one child needs £28,450 before tax and benefits
  • A single parent with two children needs £35,200 before tax and benefits
  • A family of four needs £40,000 before tax and benefits

2008-2018

The report from JRF also shows how prices have risen considerably faster than wages over the last 10 years.

Low income families now need a third more in disposable income than a decade ago to make ends meet.

Since 2008, costs have risen 35% for single working adults, 30% for couples with two children and by 50% for a pensioner couple.

Travel, energy, childcare and food are some of the sectors with rapidly increasing prices.

Bus prices, for example, are 65% more expensive than in 2008, meaning a single adult will now spend £37 a week on transport compared to £17 in 2008.

On top of this, the average price of a full-time nursery place has risen by well over 50% to £229 a week and food prices have also risen by 50%, from £29 to £44 a week for a single adult.

cost of living

Minimum Wage not enough?

Despite National Living Wage and Minimum Wage increases, many working parents are actually getting further away from reaching the MIS.

In 2008, a single parent working full-time on the minimum wage and helped by tax credits was £520 short of the MIS. In 2018 they are £3,640 short.

A couple both working full-time on the minimum wage with two children will be £2,600 short of what they need, and a single breadwinner family with one full-time worker on the minimum wage will be £6,240 short.

Pritie Billimoria, Head of Communications at Turn2us, said:

“A ‘decent standard of living’ is a dream away for most of the people we help. Over 1.5 million people who came to us in the last 12 months have incomes of less than £10,000 a year, let alone the minimum income standard.

“If nothing is done to tackle the low wages, high rents, crippling transport costs, unaffordable childcare and ever increasing food and energy bills that are behind this high cost of living, we will see more people make the impossible decision whether to eat or pay the rent.”

Source: Turn2us

Four million more below adequate living standard

Joseph Rowntree Foundation report on Minimum Income Standards reveals

Four million more people are living below an adequate standard of living and are just about managing at best, according to a new report on living standards in modern Britain – ‘Households below a Minimum Income Standard: 2008/09 to 2014/15’.

The Joseph Rowntree Foundation (JRF) research sheds light on how different kinds of household are faring, against the Minimum Income Standard (MIS).

MIS is a benchmark of income adequacy, as defined by what the public think is needed for a decent living standard. It is calculated by the Centre for Research in Social Policy (CRSP) at Loughborough University.

Millions on tipping point of falling into poverty

The report warns that millions of just managing families are on the tipping point of falling into poverty as prices rise in the shops, with forecasts showing the cost of living could be 10 per cent higher by 2020.

Key findings

Between 2008/9 – 2014/5, based on the latest available data from official statistics:

  • The number of individuals below MIS rose by four million, from 15 million to 19 million (from 25 to 30 per cent of the population).
  • There are 11 million people living far short of MIS, up from 9.1 million, who have incomes below 75% of the standard and are at high risk of being in poverty.
  • The remaining eight million fall short of the minimum, by a smaller amount, and despite having a more modest risk of poverty, are just about managing at best.

Families just about managing have been the focus of the Government’s efforts to support people on low incomes. However, JRF is warning there is a fine margin where just managing can quickly tip into living in poverty, such is the precarious state of many household budgets.

Standard of Living

Reasons for the increase

The increase in the numbers below MIS has been driven by rising costs while incomes stagnate. The price of a minimum “basket of goods” has risen 27-30% since 2008 and average earnings by only half that amount. The cost of living could be 10 per cent higher by 2020, a period when state support through tax credits and working age benefits has been frozen.

Working age households

The growing risk of low income is not due to an increased risk of unemployment but a growth in the risk working people will have low income. It shows how record employment in the economy on its own is not enough to help families reach MIS.

Almost three million working age households, six in 10 below MIS, have at least one person in work. Families with children continue to have the highest risk of having incomes that fall short of the standard, with working parents facing worsening prospects.

Lone parents

For lone parents, even those working full time have a 42% risk of being below MIS, up from 28% in 2008/09. 151,000 out of 356,000 people in households headed by lone parents working full time are below the minimum.

56% of people in single-breadwinner couples with children live below MIS – a substantial increase of more than a third over the six-year period. This affects 500,000 out of 880,000 people in such families.

For couples with children where one adult works full time and the other is in part-time or self-employment, the risk of inadequate income has increased by a half, reaching 18%. This is 310,000 out of 1.7 million people in such families.

Comment from Joseph Rowntree’s Chief Executive

Campbell Robb, Joseph Rowntree’s Chief Executive, said:

“For a truly shared society, everyone should have the chance to live a decent and secure life. These stark figures show just how precarious life can be for many families. Government focus on people on modest incomes is welcome, but it cannot be at the expense of those at the poorest end of the income scale: it must remember just about managing today can become poverty tomorrow.

“This could be a very difficult time for just managing families as rising inflation begins to bite into finely-balanced budgets. The high cost of living has already helped push four million more people below an adequate income, and if the cost of essentials such as food, energy and housing rise further, we need to take action to ease the strain. The Government can help in next month’s Budget by allowing families to keep more of their earnings and ensuring benefits and tax credits keep up with the rising cost of living.”

Read the Joseph Rowntree Foundation ‘Households below a Minimum Income Standard: 2008/09 to 2014/15 report’