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Unsurprisingly, new evidence shows that it is those on low incomes who have been hit hardest by the financial downturn – so it is those on low incomes who need to seek out debt advice the most urgently.

According to a report by the Resolution Foundation, low earners have been more likely to have experienced a drop in income than other groups – this was most pronounced amongst the 25-34 age group where 66% reported a fall in income compared to 50% in the benefit dependent group and 33% amongst the higher earning group.

As all adverse borrowers know, any drop in income can be disastrous. With high rates and innumerable debts, every penny counts every month to just get by. So by losing income, mortgages and debts become more at risk of default.

There are 9.4 million low earners of working age in the UK, living on an average household wage of £15,800. Low earners are not the poorest in society and are not in crisis but many of them live close to the cliff edge, spending all their monthly income, leaving no room for savings or safety nets – over half of low earners have less than a month’s salary in savings.

So the need for financial advice now is more crucial than ever, helping those with less make their money go further. Low earners need wealth management too, however small that wealth might be. By talking to a mortgage adviser they may find someone who can help them manage with what they have for longer.

SOURCE: Resolution Foundation, 05/03/10

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