Average Savings Level Inadequate To Cover Emergency Fund July 30th, 2008
An alarming new report from the Yorkshire Building society has revealed that the average person in the UK today could only survive on their savings for a period of 52 days if they were unable to work.
The survey, which questioned over 2000 individuals, showed that the average level of savings was £2,474 per person, but the average monthly outgoings were £1,445. Although this was the average savings figure, over one third of those interviewed admitted that they had less than £500 put away for an emergency fund. This would leave many people dependant on being able to take out a loan or use their credit card or overdraft in the event of an emergency.
Almost all the respondents to the survey said that they had no form of income protection for their salary, or even their personal loans and mortgages and 68 per cent said that they probably wouldn’t be able to manage financially should anything happen to stop them working, with one in twenty individuals saying that they would sell their house if they found themselves in this situation (easier said than done in the current economic climate).
The survey showed that many individuals have a particularly blinkered view, whether this is by choice or by ignorance it seems that people take the view that “it won’t happen to me”. This sentiment is backed up by the fact that 19 per cent of those interviewed said that they would cope on state benefits, which equate to £75.40 per week!
Out of the ten per cent of individuals who did have income protection, this was taken out to cover the monthly repayments on their loans and mortgages only, with no cover to meet the rest of their monthly commitments.
With the majority of people having insufficient savings to cover themselves in the event of an emergency, it is important to protect themselves with some suitable type of protection plan and they should take independent financial advice to assess their requirements. It may cost a little money each month to provide this type of cover, but it is a false economy to say that they can’t afford it.