Few households would survive the week on their savings if the main breadwinner lost their job, according to a new survey.
Just over a quarter of households have little or no financial safety net – 21% have nothing in reserve, while another 7% have less than £250 in the bank or building society.
This would pay the bills for about five days for the average household that spends £1,536 a month.
Young households are more likely to face a financial crisis, as 40% of those under 34 years old have less than £250 in savings, with 30% with no savings at all.
The grim survey results also highlighted a third of households could not pay the mortgage or rent if they lost their job, while 11% would have to pay their bills with a loan or credit card and another 11% would spend on their overdraft to cover living costs.
Bruno Genovese, head of savings at First Direct said: “These findings demonstrate a worrying lack of financial preparation. With the current climate of uncertainty, it is of utmost importance that families are setting aside a realistic sum of money to be used in emergencies. As a general rule it is advisable to have three month’s salary set aside in accessible savings for a rainy day.”
Building savings is the first option to cope with financial problems – but many households are struggling to stay on top of their finances.
For households with a regular monthly income, talking to a debt adviser about a financial management plan could ease monthly spending problems and stop banks and credit firms from adding late payment charges and interest to accounts.
Financial management plans reschedule monthly payments on un secured loans, credit cards, store cards and catalogue repayments. At the same time, they give the borrower enough money to pay day-to-day living costs and relieve the pressure of red letters and phone calls chasing payments from lenders.
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Notes to editors:
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