Single parents aren’t poor because of bad money choices
At single parent charity Gingerbread, we’ve been researching how single parents’ incomes and spending patterns compare with families with two parents. Our new report ‘Family Finances’ shows that lone parents’ poverty and struggles to get by can’t simply be blamed on bad choices about money.
In doing the research for this report, we were interested in finding out whether single parents were lacking key financial products, and what patterns there were in their attitudes towards money and their ‘financial capability’. We also wanted to know what their priorities were for Government action to improve their financial situation, and how they thought banks and building societies could help. The report presents the full analysis but here’s some of the highlights.
Unsurprisingly, we found that overall incomes for single parents were much lower than for couple families, but it was clear that single parents who work are still at a financial disadvantage compared to their counterparts in couple families. Single parents earn less per hour than mothers in couples, let alone couple dads who work, and single parents are also likely to work part-time. Both of these factors contribute to their lower incomes. While work is a good route out of poverty for many, it’s nowhere near a guarantee; nearly a third of part-time single parents are below the poverty line, and 22% of single parents who work full time don’t earn enough to lift their families out of poverty.
Staying with child poverty, the report also contains some new data that’s very relevant to the current hot topic around tax breaks for married families. Analysis from the IFS shows that the money that could be spent on a transferable personal allowance for married couples with young children would lift far more children out of poverty if it was spent on increasing working tax credits for couples, and the same sum would be even more effective at tackling child poverty if used to increase child tax credits for all families, whether married, cohabiting, or single parent. Interestingly, when we asked single parents who had been married whether paying less tax as a couple would have helped them stay together, 89% said it would have made no difference.
When we looked at family spending, it was interesting to see that the family budget is split up in more or less the same way regardless of family type. However, because single parents have much less money to start with, this means that their spending on key areas such as health and education is lower than couple families. We were also very interested to see that single parents’ spending on alcohol and tobacco was very low – single parents out of work spend less than the price of a pint each week on these things (median spend was £2.32) and working single parents don’t spend much more (£3.50). These are useful figures to counteract the cliché that benefit claimants spend all their money on ‘fags’n’booze’.
Looking at parents’ attitudes to money and financial capability, we found evidence that single parents who aren’t working are slightly less careful and overall they scored slightly lower on a test of financial literacy. However, the data shows that the large majority of single parents, whether they work or not, are very careful and sensible with their money, and in fact these non-working lone parents are the most likely to know exactly how much money they have in their bank accounts.
When parents were asked what would help, popular choices for Government action included allowing longer periods for repaying any tax credit or benefit overpayments, increasing the value of help with childcare costs, more funding for independent advice, and more investment to chase child maintenance debt. In terms of what financial services providers could do to help, popular choices centred around help managing cash-flow, including small amounts of credit such as a low interest overdraft or a free buffer zone on current accounts, and also faster cheque processing. Two in five also said they would like more help with budgeting and managing money from their banks.
Gingerbread also recommends that more attention should be paid to increasing job opportunities for single parents, along with access to high quality training so that they can access the jobs that pay well. And while there’s a lot to be said for paid work as a route out of poverty, it’s not a guarantee and in-work poverty has to be tackled. We also think it’s important that policy remembers that there will always be many families that can’t move into work immediately – perhaps because there are young children or illness or disability – and we need poverty solutions for these families as well.