Here’s how much money people actually need to live on during the cost of living crisis

How much do you think a person needs to earn to live an acceptable life. Not just to survive, but to live with dignity?

Well, researchers have come up with a new figure based on what the public think is needed to live a decent life, covering not only the basics of food, bills and rent, but also the things that make life worth living – social connection, leisure and the odd takeaway.

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A single person would need to earn £25,500 a year, far above the government’s legal minimum wage of £18,600 for adults aged 23 and over (the national living wage), according to anti-poverty charity The Joseph Rowntree Foundation, which commissioned Loughborough University’s Centre for Research in Social Policy (CRSP) to conduct the study.

For a couple with two children, this ‘Minimum Income Standard (MIS)’ is £43,400 between them, to be able to live a dignified family life. 

Yet, if both parents work full-time on the national minimum wage, they will only earn £37,200, just 86 per cent of what is needed to live to a decent standard.

“The government’s cost of living support will not plug the growing gap between incomes and the amount families require to meet their minimum needs,” said Peter Matejic, head of analysis at the Joseph Rowntree Foundation. 

“In order to move us closer to a society where fewer people fall below the Minimum Income Standard, the government must reform our social security system to ensure that everyone can afford the essentials and, more broadly, what the public think is needed to live in dignity.”

To calculate the minimum income standard, the researchers asked members of the public what things they thought a person should be able to afford to live a reasonable lifestyle. As well as money to cover electricity bills and food costs, this included being able to participate in society by going out to eat, exchanging presents at Christmas, giving children pocket money, and going on one modest, UK-based holiday. 

As with the 2020 calculation, those surveyed agreed that an entry-level, single screen Netflix subscription should be included for all households.

They also agreed that “being able to take part in special occasions and religious and family celebrations is an important part of feeling socially included”, and therefore budgets should cover seasonal decorations such as fairy lights, celebration food such as a Christmas turkey, and for giving gifts to loved ones. 

Report writer Abigail Davis was struck by how, despite increasing financial pressures on many, those surveyed for the research “still (emphasised) the importance and value of being able to feel part of the world around you”. 

But as prices continue to rise well ahead of incomes, “the reality is that more and more people are going to be focused on survival – keeping a roof over their heads, putting food on the table, and keeping their homes warm – and will fall well short of reaching this minimum living standard”.