How rich do you feel?

Some recent research by the TUC found that people on higher earnings thought they were closer to 'average income' than they really were, i.e. underestimated the extent to which their incomes exceeded average earnings. People on lower incomes did the opposite, i.e. did not realise just how low their incomes really are compared to the national average.

This is interesting because in our research we found that even quite wealthy older people might say that they were finding it hard to manage and felt that 'money was a bit tight', whereas people who were much poorer (e.g. on state pension only, with no significant savings) might say that they 'feel quite comfortable on the money we have'.

Of course, people get used to managing on the amount of income they have (and make commitments according to their income), and it is possible that those for whom investments and savings provide a significant part of their income, have felt squeezed due to the poor performance of the stock market and low interest rates, whereas people on state pensions may not actually have suffered a drop in income. However, we all suffer from rising prices and rising food and utility bills affect lower income households to a greater extent than higher income ones, because these costs make up a higher proportion of their expenditure.

Please post a comment about this, if you have any ideas!
Dinah 9th September 2009