Hard times? How poor families make ends meet

While better-off families use credit to spread the cost of buying consumer goods, those living on low incomes often borrow to pay bills or to meet daily living costs. Borrowing is, however, only one of a number of strategies that might be used for these purposes.

This study examines in detail the financial circumstances and household budgeting of 74 low-income families, including:

• ways in which they try to maximise their incomes;
• day-to-day budgeting, bill-paying and meeting one-off expenditure such as replacing household goods following a flood;
• patterns of informal lending between family members and neighbours, and
• use of all types of credit, from credit cards and bank loans to moneylenders, pawnbrokers and the Social Fund.

The report concludes that few families with children can make ends meet if they live on Income Support, or on incomes just above that level, for any length of time. Hardly any of them get into debt through fecklessness, but because they have too little money to go around. In fact, they face a Hobson’s choice: they either fall into arrears with many of their commitments, or they lead lives that many of us would find unacceptable. The fact that people go without food, cut themselves off from society or have to live in violent households, should cause as much concern as the current high levels of arrears and debt.