Nearly a third of UK households have less than £250 put aside as a financial safety net if they were to lose their income, according to research from HSBC.
The number of households with less than £250 saved has risen by 750,000 to more than eight million in the past year. But with the average household spending around £1,700 a month, £250 would last just 5 days.
Experts recommend that people set aside a minimum of three months take home pay as a financial cushion in case of redundancy, accident or sickness. For the average UK worker, this would be a saving of around £5,756.
However, the survey by HSBC of 1,000 UK households shows that 19 per cent have no savings at all to fall back on.
Those aged between 16 and 24 and 35 to 44 are least prepared for a financial emergency. Nearly half (46%) of the younger group has fewer than £250 in savings, and 42 per cent of those aged 35 to 44 are in the same position.
The survey also showed that women are less financially prepared than men. 21 per cent have no savings and 13 per cent have less than £250 set aside, compared with 16 per cent and 10 per cent of men respectively.
If Brits were to lose their income, 40 per cent would use their savings and 30 per cent would apply for benefits. Just 14 per cent would use their income protection insurance policy.
Bruno Genovese, Head of Savings for HSBC comments: "These findings highlight a lack of financial preparation among the British public that appears to have worsened slightly over the past year. In today's uncertain economic climate, it is important that families are setting aside a realistic sum of money to be used in emergencies.”
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