A new study has shown that even though family spending power still seems to be decreasing, there are heartening signs ahead for household incomes.
According to the Lloyds TSB spending power report, family spending on non-essential items is now on average £34 less than this time last year, representing a 0.3% drop in discretionary spending power for May.
But despite this, declining inflation does look to be benefiting household incomes as the average spend on essential items is increasing.
Indeed, in April the consumer price index (CPI) decreased from March's 3.5% level to 3% and it is thought this number will continue to fall in the coming weeks.
So what does this mean for us?
Times, however, are still undoubtedly tough for families due to poor income growth, as shown by the decrease in spending power after inflation.
Chief economist at Lloyds TSB, Patrick Foley, said: "Weak income growth and stubbornly high inflation is ensuring that the squeeze on consumers is remaining in place longer than many thought it would.
"Growth in spending on essentials is now showing signs of moderating, which is positive. But the weakness in income growth is severely limiting the benefits for consumers."
In everyday life there are many ways for us to save money and increase household income, all through altering everyday things such as how you exercise, cook, shop or heat your home.
Just buying a jacket for your hot water tank, for instance, can save £20 per year, and wearing a jumper while turning the heating down by a single degree can save 10% on your heating bills!
It also helps to budget properly for all your expenditure each month by keeping hold of all your receipts, cutting out unnecessary spending and understanding the fine art of how to budget.
Confidence improving among families
Despite the tough times and family spending power decline, there is evidence that families' confidence and optimism is increasing with the average spend on essential items.
Indeed, 79% of consumers said the inflation levels at the moment were "not good" or "not at all good" in May, whereas this number was 85% in April and 84% in May 2011, according to Lloyds TSB.
The improved optimism appears valid, too, as household income and finances seem to be improving.
Lloyds said that in May 54% of people described their situation as comfortable or said that they had a little left over after their monthly expenditure.
Young families also appear to be riding through the tough economic times, as people under 24 were found to feel the least financially restricted.
Director of current accounts for Lloyds TSB, Jatin Patel, said: "Consumers are still under real pressure financially, but we are beginning to see some initial signs that the squeeze on household finances may be easing as affordability of essential items improves."