New analysis from the Family and Parenting Institute has found that families with children will face the biggest drop in household income as a result of tax and benefit changes.
The figures show that families with children will face an average fall in income of 4.2% between the period 2010-11 and 2014-15.
This will result in an average income drop of £1,250 a year for families with children. By comparison, average household income will fall during the period by £215 a year.
Families with three children will face the biggest fall in household income due to tax and benefit changes. They should expect to see their income fall by a total of 6.8% between 2011 and 2015.
Many households face an income squeeze due to high price inflation and relatively static wage inflation. Whilst there are signs that price inflation is starting to fall, the damage this has done to household incomes over the past year is noticeable.
Managing in an environment of falling household income, regardless of the cause, can be helped with Financial Planning including a lifetime cashflow forecast.
A properly constructed Financial Plan will contain an analysis of your household income and expenditure, helping you to understand where savings can be made and how financial resources should be best allocated in order to achieve lifetime goals.
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