With a growing number of consumers said to be struggling with debt, financial inclusion network Transact has suggested that people need to learn to start living within their means.

Commenting recently, Jamie Elliott, coordinator at the group, has said that a culture of borrowing dominant in the last ten years has drawn a large number of people into debt. His assertions followed a study carried out by the group which suggested that the middle classes were being particularly struck by difficulties meeting responsibilities on items such as mortgages, credit cards and personal loans. The group noted that in Haywards Heath in Sussex and Congleton in Cheshire, for example, there had been a 100 per cent rise in inquiries over the past year.

Mr Elliott suggested that with a tightening in the credit and mortgage markets and with people coming off fixed-rate deals, many households are finding their financial situation is far less stable than it has been in the past. He noted that this constrictive environment was further compounded by large increases in the cost of electricity, gas, fuel and food in recent months.

To help combat this additional economic strain, a wholesale change needs to occur in people’s perception of loans and borrowing, he said, suggesting that Britain has one of the lowest savings rates in the world. The “culture of borrowing” which has developed in recent years needs to be replaced by a collective ambition to live within financial limitations.

“Moreover, we need to save for the difficult times. All of the financial industry agrees that it needs to encourage a culture of saving and one thing that the government is doing is the Savings Gateway. They are going to allow people on low incomes to open bank accounts and the government will match the amount, up to something like 250 pounds. Things like this, we welcome. We need to be doing much more saving,” Mr Elliott commented.

The group has also showed its support for governmental funding for debt advice groups, with an additional 55 million pounds invested over the past three years to fund an extra 500 debt advisors around the country.

For those who have found themselves placed under an increased strain as fixed-rate mortgage deals end and food costs rise, taking out a debt consolidation loan may prove a prudent course of action. By entering into lowered monthly payment arrangements with creditors, people may find they are able to reduce the likelihood that debt levels will spiral further into the red.

Doing so may be useful for the growing number of people found to be paying higher rates of interest on credit cards and loans. According to a study carried out by CreditExpert, average interest payments made on such items of borrowing has increased by 343 pounds to stand 3,790 pounds paid in the last 12 months.

In May, it was revealed by moneysupermarket that a growing number of people were turning to payday loans in an effort to meet the monthly costs of living. The use of such items of borrowing was said to have increased by 55 per cent since September of last year as many people found their paychecks were stretched by spending commitments.

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