Survey Finds A Third of UK Adults Are Not Prepared For Financial Emergencies

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18th November 2013 13:16 - Financial Services

New research carried out by HSBC has found that a third of adults in the UK would not last a week if their income was suddenly to stop with them admitting to having little or no savings to fall back on. The study also revealed that almost nine million households have less than £250 set aside for emergencies, such as redundancy, while a quarter of these have no savings at all. The findings suggest that rather than improving, the problem is worsening with the number of households in this situation rising by 800,000 since October 2012. Last year just over eight million households had £250 or less in savings.  Furthermore, based on monthly spending of £1,500, someone with just £250 saved away would only last five days before running out of money.

More worryingly the survey also identified there has been a rise in the number of people who said they would borrow to cover their costs, either through a personal loan, credit card, or by using their overdraft. Those finding times particularly tough are aged 35 and 44 with a third (33%) admitting to having no savings at all, while a tenth (12%) said they had less than £250 saved away. However, their monthly take-home pay is higher than all other groups of working age with an average of £1,379 a month.  It was also discovered that men are more prepared for a financial emergency, on average they would be able to live off their savings for over a year, while it’s claimed women would only last seven months.

Additionally the research also found that just 36% said they would use savings to cope with a sudden loss of income which is down from two-fifths (40%) who said the same in 2012. The number of people saying they would apply for benefits has also fallen slightly, from 30% to 29%.

Commenting on the findings, Oliver Cook, Head of Savings at HSBC said:

“The findings indicate that the proportion of Brits who are financially unprepared should they face any unexpected expenses or loss of income has risen steadily over the past year. Getting into the habit of saving and making regular savings, no matter how small, can help to build up a financial safety net that avoids having to resort to methods that add to debt. As a target, it's important to keep in mind that as a general rule, a minimum of three months' salary should be available for a rainy day.”

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