Finance Friday | Recession–what recession?
It seems the British economy is growing and we aren’t in recession after all. GDP has increased 0.3%. Well it’s better than nothing. That means spending has increased by 0.3%, that’s combined spending, the government’s and ours. The government is spending less. Are we spending more?
I’m spending more on food, water, petrol and a lot more on gas and electricity. These are the essentials. The telecoms companies are putting up standing charges again. Is that an essential? I suppose it is, because you need a phone to phone for emergency services or those horrible 0845 numbers that the government always prefers. The calls have got more expensive as they cut operators and put you on hold longer too. The TV licence isn’t essential, my TV works fine without one, but can get you a hefty fine if you don’t have one. Council tax is the same, more or less essential because the punishment for not paying can be draconian. There are other little essentials like stuff to keep your home clean and loo roll. It’s even unlawful to allow the weeds in your garden to get out of control, so you have to spend money on that. The price of loo roll has gone up, I’m not sure about weed killer.
So you pay your National insurance and tax, etc. and what’s left is your disposable income. Then you pay for all the essentials, being careful not to overspend on loo roll and weed killer, then what you have left is your surplus income. If you happen to be working, you might think transport to work is an essential too, the cost of that’s gone up too. So how much do you have left when you have paid for all the essentials? Do you £155 a week of surplus income to squander on luxuries?
Yes, you should have a £155 left in surplus income after you have paid out for essentials. That’s more than last year, so you’re better off! This fascinating insight into how well off we are comes from research done by Asda. You can click that link to read that report for yourself. This is of course for a whole household. I assume a household would be a couple with 2.4 children or something. According to Asda, net income (take home pay) would be around £580 and essentials including loo roll, would come in at £425 a week leaving you £155 to spend on lottery tickets (no wonder the jackpot keeps going down), holidays, bingo, toys for the kids, cinema and theatre, eating out and sport. So out of your £35,000 a year income, you only get about £7,500 left to enjoy yourself with after all the essentials are paid for. It doesn’t seem much does it? A holiday for the kids at Disneyland would take care of that much…
We are talking about averages here, not a typical family where the wife works for Asda on minimum wage of £6.21 an hour, part time. Her earnings wouldn’t even pay for that holiday. No, I suppose we are talking about those nice office workers that we see at the council or the jobcentre. The CEO of my local council gets around £140,000 a year. I bet his wife isn’t on minimum wage at Asda. They could have a joint income of £200,000 a year. How much would they have in surplus income to spend on Disneyland holidays do you think?
There was a suggestion this week that the minimum wage should be increased to give people more surplus income and a better quality of life. It was also suggested that a maximum wage should be introduced. Is a maximum wage practical? Could one be imposed on the whole of society? I think a maximum wage of £100,000 a year could be introduced for public sector employees.
Not enough for judges? Not enough for the CEO of my local council? Perhaps we could offer them free financial education to help them budget better? Maybe they have too many spare rooms?
Please share your thoughts in the comments box.