You are here: Home - Saving-Banking - News -

A fifth of UK workers had no rainy-day fund before Covid-19 crisis

0
Written by:
11/05/2020
One in five workers had no emergency savings before the coronavirus lockdown, research shows.

Women were more likely to have a rainy-day fund, with 25% stashing cash aside compared to just 17% of men, the survey by investment platform AJ Bell found.

Those who did have emergency funds had on average six months’ salary saved.

Young people aged 18-34 had an average cash buffer of 4.5 months, while the 55s and over had around 10 months’ worth of salary.

Tom Selby, senior analyst at AJ Bell, said: “Millions of people in the UK were living on a financial precipice prior to the Covid-19 shutdown, with a fifth of workers admitting they had no emergency cash set aside whatsoever.

“Sadly many will now be facing huge financial distress as a result of losing their job or being forced to take a pay cut.”

However, the findings suggest 61% of people have not seen a drop in income as a result of the current crisis, with over two-thirds saying they are also spending less money.

Selby said: “For those lucky enough to still have a job at the moment who have put off saving in the past, now could be the perfect time to build a rainy day fund.

“As a general rule you should aim to have enough money in an easy access cash account to cover at least three months’ fixed expenses. This should ensure you can pay any unexpected bills, although some will prefer to hold more than this to protect against less common risks (including hits to the wider economy).”

Cash in retirement

He also said those in retirement should consider holding a cash buffer to ensure they aren’t forced to ‘sell on the dip’ in the event of a significant fall in markets.

“While there is no hard and fast rule when it comes to holding cash in retirement, having at least enough to satisfy 12 months’ income withdrawals is a sensible approach.

“However, it’s important to remember that while cash may not fall in value in nominal terms, its spending power will be eaten away by inflation if it is held for too long.”

Click here for a list of best buy savings accounts

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.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

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.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week