Is the cost of living starting to catch up with middle earners?

The cost of living has been tough for quite a few years now. And the latest debt figures suggest that the pressure may be starting to reach more households who, on paper, should be doing OK.

New figures from the Insolvency Service show that one in 360 adults in England and Wales became insolvent in the year to July. A year earlier, it was one in 412.

That's a noticeable increase.

But there's something else in the figures that's worth paying attention to: the biggest rise is in a type of insolvency often used by people with an income or assets, such as a home.

What's happening?

There were almost 12,000 individual insolvencies in England and Wales in July. That's 14% more than the same month last year.

Individual voluntary arrangements (IVAs) made up most of these and were up 27% on last year.

IVAs are one way of dealing with serious debt. They're usually used by people who have some income or assets and can afford to make regular payments towards what they owe.

By comparison, debt relief orders (DROs) - which are designed for people with very low incomes and few assets - fell slightly.

So, while we can't say from these figures alone that middle earners are struggling more, there are signs that financial pressure is affecting people further up the income scale too.

And that's something worth watching.

Why could things get harder?

For many households, there's not much room left in the budget.

Mortgage or rent payments, energy bills, food, car costs and other essentials can already take up a large part of your income. If one or two of those costs rise, there may not be much left to cut back.

The next few months could bring more pressure.

Ofgem is due to announce the next energy price cap on 26 August, which will affect what most households pay from October. Mortgage rates are also still an issue for anyone coming to the end of a fixed-rate deal.

This doesn't mean everyone is heading for financial trouble. But if your budget is already stretched, a small change in your monthly costs can make a big difference.

What if this sounds familiar?

You don't have to be on a low income to struggle with money.

We've seen plenty of people with a good salary or a mortgage put off asking for help because they feel they should be able to manage on their own.

But the reality is that thousands of people are finding their income isn’t stretching far enough. And you don't need to wait until you're in crisis before getting support.

A good place to start is our budget planner. It can help you see exactly what's coming in and going out each month and where you might have some room to make changes.

It's also worth checking whether you're entitled to any extra support. Our benefits calculator can help you find out.

If energy costs are worrying you, we've also put together information about help with energy bills.

And if you're struggling with debt or simply want to understand your options, speak to us. We'll look at your situation with you, explain your options and help you work out what to do next.