Commentary: The problem is, disposable income is disposed of

Great news from the Government — Londoners are much better off than everyone else in the country.

Official figures published last week by the Office for National Statistics revealed that the average Londoner has an annual disposable income of £20,238. In comparison, the UK average disposal income is £15,709 and the hard-up folk who in the North-East have to struggle by with a miserly £13,329.

So how are you going to celebrate this new-found wealth? If you’re like me, you’ve probably yet to find it. I’ve searched the back of the sofa but that just yielded two pennies and a button.

What the figures prove is that there is a growing chasm between the wealthy and the struggling. In fact the richest 10% of Britain’s households are more than 500 times wealthier than those in the bottom 10%, according to the ONS figures.

Looking more closely at disposable income data, we see that those in the UK with the most cash are actually in inner west London, ie such areas as Kensington, Knightsbridge, Chelsea, Holland Park and so on. Those living in these wealthy areas have — at £33,323 — twice the disposable income of the average, and almost two-thirds more than the average Londoner. More shocking still, they have more than three times the cash available than those living in Nottingham — the lowest disposable income in the country at £10,702.

What can we learn from these data? If you’re an average Londoner, you’re better off than most of the rest of the country, but not as well off as many. If you want to improve your wealth, it probably means you’re a spender, rather than a saver.

Those who save not only build up a nest egg but also benefit from compound interest which increases the gap between them and spenders.

Spenders seldom save, sometimes out of choice — but more often because they can’t afford to. In short, if you want to increase your wealth, you’ll have to save more. Simple, isn’t it? Impossible for the average Londoner, though, sadly.