Britons have seen their disposable income fall by nearly 30 per cent during the past two years, new research shows.

The average household has only 25 per cent of their salary - or £382 - left each month after paying all of their essential outgoings, such as their mortgage or rent, bills, food and transport costs.

The figure is 29 per cent below the £541 people had left to spend after meeting all of their bills two years ago, according to Abbey Credit Cards.

One in ten people now spends 90 per cent of their pay on essential outgoings, leaving just 10 per cent for discretional spending, following recent hikes in the cost of living.

Unsurprisingly, the Abbey research showed that people's biggest month expense is their mortgage or rent, which takes up an average of 24 per cent of their take home pay.

The high cost of bills and essential outgoings leaves people with only 5 per cent of their pay to spend on socialising and 4 per cent to buy clothes.

Once other discretionary expenditure has been taken into account, people have just 9 per cent left over to put towards savings.

Callum Gibson, head of Abbey Credit Cards, said: "With the cost of living increasing so drastically in the past two years, in particular the cost of essentials such as food and bills, it's important to make sure that you budget effectively and economise wherever you can."

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