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16 Million Brits ‘Living On The Edge’ With Zero Savings

– 71% of UK homes are caught out by unexpected bills – average unforeseen cost of £1,101 per household

– Loans to loved ones are most expensive unexpected cost for households – the average loan is £2,482

– Money Advice Service urges households to save £3 a day to help cover unexpected bills during the year

New research by the Money Advice Service has found more than 16 million* people (33% of the UK adult population) are ‘living on the edge’ every day – with no savings whatsoever. Yet the majority of UK homes (71%) experienced unforeseen costs or bills last year – on average, households hit by unexpected costs stumped up £1,101 last year.

The survey found that 46% of householders worry about how they will pay for unexpected bills – this rises to two-thirds (66%) for those without any savings. A quarter (25%) of the people surveyed said if they received an unexpected bill, they would be forced to go into debt, or increase their debt, in order to pay for it***.

The Service also found loans to loved ones are the most expensive unforeseen costs. Many household budgets are being thrown off course when friends or family need financial help. More than one in ten households (12% of UK homes) unexpectedly lent money to friends or family in 2013 – the average amount lent was £2,482.

The Service is concerned about how many Brits have no contingency savings, and points to worrying findings highlighting the financial strain this puts on their home life: (34%) said unexpected bills had a ‘big impact’ on their family’s finances in 2013. The top three most common unexpected costs were: car repairs (29%), optician’s bills (15%) or technology breakdowns that urgently required repair/replacement (15%). See list of the top five in Table 2.

Although just over a quarter (27%) of people said they can save money on a monthly basis, two in five UK adults (39%) said they haven’t been able to put any savings aside during the past six months. Furthermore, those with savings have in many cases seen their pots shrink – well over a third (37%) of Brits said they have less savings now than last year. Worryingly, this rises to 46% for those approaching pension age (55-64 years old) – many of whom will rely on savings, and the interest accrued, to supplement their retirement income.

‘Not having a high enough income’ was identified by three-quarters (75%) of UK adults as the main reason they are unable to save money regularly; whilst many (32% of people) admitted they didn’t have enough to save after paying rent, mortgage and other regular bills.

The Money Advice Service is urging people without contingency savings to begin making small, regular savings to ease the strain and shock of unexpected bills. The Service suggests saving £3 per day**, per household, to help cover the cost of unexpected bills during the year ahead.

Commenting on the research, Caroline Rookes, CEO of the Money Advice Service said:

“These results highlight the financial and emotional strain that just one unforeseen emergency bill can bring. With millions of homes experiencing unexpected costs of over a thousand pounds each year, it’s vital people know how they might cope. We urge everyone to plan for ‘rainy days’ and build up a buffer to cover unforeseen costs. Even a small pot will help you cope with the shock of the unexpected and ease the strain. Setting a small amount gradually – such as £3 a day – will really pay off in the long term and provide peace of mind if you’re hit by an emergency bill.

“We have a range of tools on our website to build you build a buffer – such as the Cutback Calculator and Budget Planner – which will show you how much cash you could free up each day, week or month without heavily compromising your lifestyle. You’ll be surprised what a big difference your small change can make – it will really ease the strain next time you’re caught off guard.”

1. Jigsaw Research surveyed 2,024 UK adults for the Money Advice Service in December 2013 with a Populus Online Omnibus. The interviews were conducted with a nationally representative online sample of GB adults 18+. Quotas were set on age, gender and region and the data weighted to the profile of age, gender, region, social and working status.

 

2. *33% of UK adults surveyed said they had no savings or investments. Across the UK population this equates to 16m people (33% x 49,122,174 adults = 16,210,317, derived from 2010 ONS Population tables).

 

3. **£3 per day will approximately cover the average amount that unexpected bills total on an annual basis per household (£3 x 365 = £1,095. Average unexpected bills in 2013 averaged £1,101).

 

4. 16% of UK adults surveyed said they are choosing to pay off unsecured loans rather than saving money.

 

5. The Cutback Calculator and Budget Planner can be found at www.moneyadviceservice.org.uk/tools; more advice to help people save £3 a day at www.moneyadviceservice.org.uk/en/campaigns/save-gbp3-a-day-for-emergencies (Please note this will go live 24.01.2014)