Rising debt forcing 4M parents back to work

A new study by the Scottish Widows shows that the level of debt amongst parents with dependent kids is rising dramatically, forcing an estimated four million parents to go back to work. The group said these people need debt management advice to help them from their economic quagmire.

The research revealed that three out of five or 60 percent households with dependent children rely on two or more incomes to make ends meet. Adding to their woes is the rise in their personal debts.

Scottish Widows’ protection director, Clive Allison said, “The days of one parent going out to work while the other takes care of the family is just not an option for many people. Nearly half of families with dependent children now rely on two incomes to maintain a decent standard of living, and as our stats show, this isn’t likely to ease off any time soon. For many families, sacrificing half their income when they have children is a luxury they just can’t afford.”

According to the study, at least 44 percent of households are reliant on more than one breadwinner to maintain a comfortable lifestyle.

Key facts of the study include:

• 11.3 million UK households (44%) are dependent on more than one salary to cover bills;
• Of the 6.6 million UK households with dependent children, four  million are reliant on two or more salaries (60%);
• Levels of debt also increase with children – the average household with dependent children has £91,648 still outstanding on their mortgage, an increase of over £3000 from last year (£88,500);
• Those with no dependent children have significantly less mortgage debt – £73,293 and have managed to reduce it by over £4,000 since last year (£77,500); and
• The average household with dependent children has carried over £8,653 in short term debt over the last three months, compared to an average of £7003 for those with no dependant children

The result of the study also highlights the reality that millions of households cannot survive financially if one of the bread winners become unable to work as a result of critical illness, death, disability or due to an accident.  Furthermore, the research showed that 62 percent of Brits have not protected themselves for the long term should the worst happen and they lose their household’s main income.

Allison added, “The increase of debt for those with dependent children is worrying. People are leaving themselves exposed to a lack of income should anything happen to the main breadwinner, and large personal debt to repay on top of this could make things even more difficult. Families need to make sure they protect themselves financially so if they do get into difficulties they have the vital back up in place to look after their families and loved ones. If households do not have sufficient protection, such as life cover and critical illness cover for any of these circumstances, many could be left struggling.”