You are here: Home - Mortgages -

31% of UK households have less than £250 in savings

Written by:
New research from HSBC reveals that 31% of UK households have less than £250 set aside as a financial safety net.

The recommended minimum ‘salary cushion’ is three months’ average monthly take-home pay – £5,756.2

The survey of over 1,000 UK households shows that a fifth (19%) have no savings at all to fall back on and 12% have savings of less than £250. With average monthly household outgoings currently £1,669, these savings would last just five days.

The number of households in this situation has risen by three quarters of a million to over eight million since last year, when 28% had maximum savings of £249.4

Those aged 16 to 24 and 35 to 44 are least prepared for a financial emergency – and worse prepared than they were in 2011. 46% of the younger group has fewer than £250 in savings (32% in 2011), while 42% of those aged 35 to 44 are in the same position (35% in 2011).

Similar to last year, women are far less prepared than men; 21% admit they have no savings and 13% have less than £250 set aside, compared to 16% and 10% of men respectively.

28% of people admit they would be unable to cover their rent or mortgage at all if they were to unexpectedly lose their main source of income.

While 40% say they would use their savings to meet their essential outgoings, they may be underestimating the amount they would need. Worryingly, over one in ten would rely on personal loan, credit card or their overdraft in the event of a redundancy.

How Brits would cover monthly outgoings if made redundant

1. Use their savings (40%)

2. Apply for benefits (30%)

3. Use their income protection insurance (14%)

4. Expect partner or family to cover them (13%)

5. Use credit card / personal loan or overdraft (11%)

Bruno Genovese, head of savings for HSBC comments:

“These findings highlight a lack of financial preparation among the British public that appears to have worsened slightly over the past year. In today’s uncertain economic climate, it is important that families are setting aside a realistic sum of money to be used in emergencies. As a general rule, a financial safety net of at least 3 month’s salary should be set aside in accessible savings for a rainy day.

“By putting away a small amount each month, Britons can help themselves build up an emergency savings pot as provision for any eventuality without having to rely on a solution that could push them into the red.”

Tag Box




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:
NIESR revises down 2013 growth forecast for UK

UK think-tank NIESR has revised down its growth forecast for the UK next year, despite a strong third quarter which...