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Savings chasm in millions of households

New research highlights lack of rainy day fund

Savings 60 second guide

Many UK households are failing to save for a rainy day

A fifth of British households have no savings at all and just under a third have less than £250, according to a survey by First Direct bank, suggesting that many would need to borrow money within days if they lost their main source of income.

The survey of over 1,000 UK households revealed that 28% have below £250 saved, 21% of which have no savings whatsoever.

With those surveyed averaging monthly outgoings of £1,536, or £50 per day, savings of £250 would last them less than a week if they suddenly found themselves out of work, for example.

Women saving less

Young people were the worst positioned with 39% of 25 to 34 year olds having less than £250 saved and 30% with nothing in reserve at all.

Women faired worse than men with 24% admitting to having no savings, compared to 16% of men, while the North East of the UK was the area where people were least likely to have any savings.

The survey also found that 32% of people would not be able to keep up rent or mortgage payments if they lost their primary source of income with 22% saying they would resort to either a personal loan, credit card or overdraft to cover essential outgoings.

Find ways to save

While these figures may give cause for concern, a more positive picture emerged from new data released by NS&I last week, which showed that young male (aged 25-34) savers were putting away an average of £104 per month, above the national average of £88.

With ongoing uncertainty in the UK economy, the importance of having savings to fall back on should not be underestimated.

Which? money saving tips could help you identify ways of putting money aside to build up an adequate amount of cash, should you unexpectedly need it. A good initial target would be to have the equivalent of three months salary in savings.

More on this…

  • Earn better interest – Use our savings account rate booster 
  • Best rate savers – compare the best rate savings accounts here 
  • Bank alternatives – learn more about saving with a credit union
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