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One in four high earners don’t have enough emergency savings

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A quarter of Britain’s high earners don’t have enough rainy-day savings, leaving them vulnerable if they need to shell out for unexpected expenses, research shows.

Some 23 per cent of people with a household income of £100,000 or more have less than the recommended three to six months of expenses in savings, according to a survey of 10,000 people by Folcodata for Hargreaves Lansdown.

Around one in ten (12 per cent) households bringing in £150,000 or more could only last a single month on their savings, the study found.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Some high earners have been scuppered by sky-high bills, while others have been lulled into a false sense of security, and some have just never considered how much they might need to save. Whatever the reason, it means thousands of higher earners are far less financially resilient than they need to be.

“Part of the problem is that spending tends to expand to fill the cash available, so there’s nothing left to put aside for emergencies. If you live in a property with a large mortgage, have children at private school, and are paying for a high-end car, all these things may feel like necessities that you can’t scale back in order to free up cash for emergencies.

“Those who earn more may also be more comfortable going into debt to cover emergencies, because it will take less time to pay it off if their income stays the same.”

Previous research by Hargreaves Lansdown showed that the more people earned, the more likely they were to overspend each month and end up in the red.

How much do you need?

To work out how much you should be keeping aside for a rainy day, Hargreaves Lansdowm says:

Consider which of your expenses are essential. It’s not necessarily just about keeping a roof over your head and paying the bills, there may be other regular payments you have to keep up.

To work out where on the spectrum of 3-6 months’ worth of expenses you should sit, start with how much of a safety net you’d feel comfortable with.

Add in your work situation: whether your income varies, if your job is at risk, and how long you’d expect it to take to find work again.

And consider your broader circumstances, like your health, your caring responsibilities, and the health of those you are responsible for looking after.

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