Household budgets continue to be over-stretched

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A recent report has shown how the household budgets of average Americans continue to be over-stretched, with increases in income levels failing to come anywhere near the increases seen in spending over the past twenty years. The research was carried out by the Pew Charitable Trusts and paints a bleak picture of how households are having to try and cope and are finding it increasingly difficult to do so because of their financial situations.
 
Many families are now struggling because of the increased costs associated with running their household. The data in the report showed that over the past twenty years there has been a massive 25 percent increase when it comes to the cost of running a household. However, the same trend has not been seen in terms of wage increases, which is what has left families struggling to make ends meet financially.
 
Not spending on luxuries
 
Another factor that was highlighted in the report was the fact that the increased spending by households was generally nothing to do with splashing out on luxuries such as gadgets, devices and holidays. The increased spending has been going on essential spending such as household goods, travel and other day to day expenses, the cost of which has increased dramatically over the years.
 
An official from Pew said that the information that they gathered from the research carried out showed just how little flexibility households now had when it came to their budgets. This is something that can pose serious problems in the event of a financial emergency such as emergency repairs or unexpected bills, as families have little or no room for movement in terms of their finances.
 
The study also found that both household income and expenditure had contracted during the recession, which had further impacted upon the difficulties that many families are facing with their finances. However, officials from Pew said that while spending had started to recover since the recession income levels hadn’t, putting further strain on families who were already under pressure with money worries.
 
Other data from the report showed that compared to 1996 the average American household was spending a larger percentage of their income on essential costs such as food, transport, healthcare and transport. However, the percentage of income spent on things such as caring for pets and entertainment has seen very little change since that period. The percentage of income spent on rent costs by those on lower incomes came in at nearly 50 percent according to the report.       

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