We all know the importance of saving, but unfortunately, it doesn't seem as though the majority of us are able to set aside quite enough. According to research from Lloyds Bank, 50% of those surveyed have less than two months' income in savings – £4,308 based on the average full-time wage – while 35% have less than one month's (£2,154) stashed away.
The figures highlight the worrying fact that savings levels remain stubbornly low, and come despite continued economic improvement in the UK. It had been hoped that this would start to translate into people's wallets – and savings accounts – but this hasn't yet happened, and in fact only 16% have more than four months' of income (£8,616) safely locked away.
However, despite this apparent lack of saving for a rainy day, the majority of people understand its importance, with 87% saying it's important to have a minimum amount to protect against unexpected costs. However, half of those (50%) said they'd need at least two months' worth of income for emergencies, with 22% saying they'd need four months' income or more, so it's slightly worrying that such a small number actually have that amount saved.
General consensus is that everyone should have around three months' worth of income as an emergency fund, so a large number of people could come unstuck should such an emergency occur. If you were to be out of work due to illness or redundancy, for example, you'd need to have sufficient savings to cover you until you could return – but the figures show that the majority don't have that kind of backup plan.
The main reason for this is a lack of spare money, with 32% unable to save for this very reason, and 30% haven't been able to save at all over the last year. However, over a quarter (26%) of those surveyed are able to save regularly throughout the year, and this is the habit that more people need to get into.
Philip Robinson, Lloyds Bank savings director, commented on the findings: "Although confidence in the economy is improving, one in three of us still have less than a months' income in savings. People do recognise the importance of saving and if they are able to get in the habit of putting away small amounts each month, the rainy day savings pot will grow as their circumstances improve."
Even saving little and often can make all the difference, and if you opt for an easy access account, you'll be able to withdraw the money should the need arise and can add extra cash as and when you're able. Rates may not be setting the world on fire but you'll still be able to build up a pot, and just knowing you've got a financial safety net can make the world of difference. You'll have an emergency fund in no time!
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