After a couple of years of having to make do with below inflation pay rises, there are signs that incomes will rise in real terms during 2013.
A report from the Centre for Economics and Business Research (CEBR) has found that household incomes should rise by 0.5% in 2013, once price inflation has been taken into account.
This follows a projected 0.2% drop in household incomes, in real terms, in 2012.
A combination of pay freezes or very low pay rises with higher than average price inflation has placed the squeeze on household incomes in the years following the onset of the global financial crisis.
Whilst price inflation has been falling to more realistic levels since its peak at 5.2% last September, pay rises have yet to improve as the economy continues to falter.
The CEBR believes middle income households will experience real terms pay rises of 1% next year and lower income families will see real terms increases of 1.5%.
Those in the wealthiest households should see their real incomes improve by 0.7% in 2013, as pay and bonuses for top executives are more modest.
This is where good Financial Planning can play an important role.
Understanding the detail of your expenditure – what is essential or ‘committed’ and what is ‘discretionary’ – is important when establishing the available financial resources to meet your chosen financial goals and objectives.
Do speak to us if you would like to get a better understanding of your expenditure, including how you can increase the gap between your net income and expenditure to build wealth to meet future objectives.
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