Families reckon they need £4,000 a month to be comfortably off

Research published yesterday showed that more than six in ten people are not financially secure and have to rely on credit to cover basic day-to-day living costs.

Nearly two in three people have suffered a pay freeze in recent years and only three in ten workers expect to get a pay rise this year.

The study, by comparison website uSwitch, shows that the average household is a staggering £1,435 a month short of being financially secure.

While the average monthly household income stands at £2,504, consumers say they need to bring in £3,939 to feel financially secure.

In fact, the gap between the dream income and reality is so great that more than six in ten don’t feel secure at all.

More than a third of Brits define financial security as having enough money to cover basic day-to-day living costs without having to rely on credit.

But of these, just 40 per cent are in this position. The second most popular definition is to have at least six months’ salary in the bank, but the survey says just a third have this back-up.

Seven in ten people say financial security means not having any debt on credit cards or loans or an overdraft to repay.

Recent figures from the Bank of England showed that unsecured consumer credit rocketed to £635 million in June from £408m in April.

The research found many people are still struggling to recover from recent hikes in energy bills, petrol and food.

Since 2004, energy bills alone have rocketed by 140 per cent –outstripping income, which has risen at a rate of just 20 per cent.

Although recent figures show that wage increases in the  private sector rose faster than the UK inflation rate last quarter for the first time in three years, one in seven workers have had their pay frozen for at least three years.

Michael Ossei, a uSwitch personal finance expert, said: “The dream of financial security seems a long way off for many. Years of pay freezes and the rising cost of living have hit consumers hard and led to a  financial nightmare where they are now almost £1,500 a month short of the household income they need to be secure.

“And it’s unlikely that things will get better quickly – with few people expecting pay rises, most homes are unlikely to see any rise in their monthly income, let alone the sort of increase they feel they need.

“What is encouraging though, is that so many people associate financial security with not relying on debt. Cutting back on credit and reducing your debt in the current climate is one of the best things you can do and will put more people back in control of their finances.”