You are here: Home - Credit Cards & Loans -

The price of financial security? £4,000 in the bank

0
Written by:
16/08/2012
As the costs of living keeps on increasing, the average Brit now needs to have an extra £4,000 in the bank to feel financially secure.

But according to uSwitch, the average household falls £1,500 a month short of that mark, with 61% of those polled not feeling financially secure at all.

uSwitch say that for the average Brit to feel secure in the current economic climate, they want to have enough money to cover basic day-to-day living costs without having to rely on credit, yet just 40% are in this position

The second most popular definition is to have at least six months’ salary in the bank just 35% of respondents have this.

Michael Ossei, personal finance expert at uSwitch.com, said: “The dream of financial security seems a long way off becoming a reality for many. Years of pay freezes and the rising cost of living have hit consumers hard and led to a financial nightmare where they are now almost £1,500 a month short of the household income they need to be secure.

“And it’s unlikely that things will get better quickly – with few people expecting pay rises, the majority of homes are unlikely to see any rise in their monthly income, let alone the sort of increase they feel they need.

For just over one-in-ten people (14%), financial security means not having any debt on credit cards or loans or an overdraft to repay.

However, recent figures from the Bank of England show that unsecured consumer credit rocketed to £635 million in June from £408 million in April.

With inflation falling, there is some good news for consumers. But many are still struggling to recover from recent increases in the cost of living, including energy, petrol and food.

Since 2004, energy bills alone have rocketed by 140% – outstripping income which has risen at a rate of just 20%. uSwitch say that these increases were made worse for many as they weren’t offset by pay rises.

Ossei added: “It’s especially worrying for new students, who will face a debt mountain of over £50K when they graduate, but can expect an average starting salary of little over £21,000.”

Ossei also points to cutting back on credit and reducing your debt in the current climate as one of the best things you can do and will put more people back in control of their finances.

“And while many may feel unable to save, putting away as little as £10 or £20 per month can help to build a savings pot. Saving a little and often can make a big difference and cutting back on household bills like energy could free up some cash to help you feel more financially secure.”

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2199093-airplane-generic
Brits heading abroad start holidays on a massive spending spree

Brits heading abroad are spending more than £200 even before they get to their destination, according to a recent report...

Close