More people having to raid savings to make ends meet

A growing number of families are being forced to raid  such as ISAs as a way of affording essential everyday outgoings like gas and electric.That is the view of Tim Nichols, spokesman for the Child Poverty Action Group (CPAG), who has said the rising cost of living in the aftermath of the global economic downturn is putting additional pressure on household finances.Mr Nichols explained that consequently, those who are "fortunate to have a " containing spare funds; face little choice but to dip into these funds put aside just to make ends meet on their bills.He stated that there has been "some evidence" in recent economic figures that this is the case, as consumer spending patterns appear to show the increasing reliance individuals have on the likes of ISAs.On the other hand however, the expert noted that those people without the monetary safety net provided by savings are really struggling at present, particularly any families that have to live on low household income."Low income families who are classified as being below the poverty line or below the fuel poverty line ... are almost certain not to have any savings," he added.Last week (July 6th), online resource uSwitch revealed that around a quarter - 24 per cent - of all households across the country are finding it tough to cope in terms of the amount of money they are having to spend on utilities.This comes after Joanna Parsley, associate director of Credit Action, said recently that many families are set to find their finances squeezed even further in the coming months due to the ongoing effects of the VAT rise.Ms Parsley explained this may cause more people to have to borrow money in order to survive financially and afford bills in the wake of the recession.Meanwhile, according to David Rodger, managing director at the Debt Advice Foundation, low-income families could be finding it difficult to receive loans from banks.This is mainly due to the fact the high street organisations tightened their lending criteria in the midst of the recession.Mr Rodger states: "The main concern right now is that low income households are easing their financial burdens by accessing short-term credit such as payday and doorstep loans, which are particularly prevalent in low income areas."While a credit card might be seen as useful in the short term, many people end up in greater debt in the long run, as interest adds up.Those who cannot cover their essential outgoings could be failing to claim their full benefit entitlement, which explains why some £16 billion is left over each year, Mr Rodger notes.The Consumer Credit Counselling Service recently suggested the average unsecured debt of clients earning up to £13,500 annually stands at £12,870.