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For most people (and households), their main source of income is the pay they get from work. Those not in work (such as the unemployed, elderly, and people who are unable to work) depend, to a greater or lesser extent, on a wide range of social security benefits. In the past, the tax and benefit regimes resulted in some low-income families being caught in the 'poverty trap', where an increase in earned income resulted in a loss of benefit, which left them no better or worse off overall. The Government is now moving to a more integrated tax-benefit system, with the introduction of, for example, working families tax credit.
Our consumer-orientated society offers many opportunities to spend. The first priorities are food and shelter. As we grow more affluent, an increasing proportion of our income is spent on non-necessities, such as leisure pursuits and travel, to the extent that people who cannot afford these can now be regarded as 'deprived'. Credit, in its many forms, allows us to borrow to acquire expensive capital items. However, used unwisely, it can lead to a deepening spiral of debt and bankruptcy. Lack of access to traditional financial services, such as banks and credit, may force the socially excluded into high-interest forms of borrowing and further financial difficulties.
Many people put part of their income into savings, in an ever-increasing range of bank and building society accounts, many of which offer tax or other incentives. Internet banking is a recent development. People also invest in pensions and private health care and in stocks and shares. For many, their most significant asset will be the house in which they live.
This chapter provides a short overview of these issues from a social perspective: Scottish Economic Statistics provides further information, for example, on trends on household income from the national and regional accounts.
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