Disposable Income: The Truth of the Money
According to recent reports the top 1% in the world now own 50% of the wealth – a frightening statistic which puts into perspective just how much so few have. If you were wondering where you would appear on the rich list then here is benchmark for you – to be among the wealthiest 50% in the world you need £2,065 to your name.
It doesn't sound like very much to be considered in the top half of the world's wealthiest but with 13 million people in the UK alone living below the official poverty line we take a look at what we spending our money on and see if disposable income really exists.
So What Actually Is Disposable Income?
The term refers to the money left over from your pay packet after all taxes have been taken off, so in the UK this would be PAYE and income tax. This is also commonly referred to as your gross income. The term disposable income is often confused with discretionary income which is the remaining balance after essential expenditure, such as food, shelter and clothing, has been deducted.
So what does the average Brit spend their pay-packet on and how much of it is left over after this essential spending is taken into account?
Average Weekly Household Expenditure
If we were to take off the discretionary income items of housing (£74.00), food (£59.00) and clothing (£23.00) it would leave the average person with £361.30 worth of expenditure every week which could be considered optional, although with transport, education and health making up just under a quarter of this, the term 'optional' is used quite loosely.
The total average weekly household expenditure is £517.30; below is a breakdown of how some of this money is spent:
Other Additional Expenses
Overall the average weekly household expenditure adds up to a staggering £26,899.60 per year – around £400 more than the average annual UK salary – but what about other expenses that we may find in our lives, how are we expected to account for the cost of:
With the unemployment rate in UK currently around 5.6%, there are an estimated 1.8 million people looking for work and just over 800,000 of these claiming Job Seekers Allowance at a maximum of £73.10 per week. Add to this the fact that millions of people aren't earning the current UK living wage of £7.85 per hour, or £9.15 an hour in London, means that there is a high percentage of the UK population who are struggling to make ends meet.
With the average UK wage currently standing at £26,500 per annum it means that unless you are in a dual income household then you would struggle to afford the average expenditure outlined above.
And finally, to put all of this into perspective since you had been reading this piece, the annual salary of:
- A Premier League Footballer - £2.3 million
- The Prime Minister - £142,500
- A Teacher - £32,547
- Civil Servant - £20,330
- A Hair Dresser - £10,174