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Brits’ rainy day savings too small

Brits’ rainy day savings too small

Category: Savings

Updated: 04/10/2010
First Published: 04/10/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

In the event of an emergency, are you prepared to weather the financial storm? New research has revealed that millions of Britons are not.

Almost four million people in the UK have less than six months' worth of emergency funds, according to Scottish Provident.

This means that if something unforeseen were to happen to them or their family now, by February 2011 they would be unable to maintain their current lifestyle.

Worryingly, many people would be prepared to live off their credit card, which would give them five months' worth of emergency funds.

This means that after five months they'd have to drastically cut back on their living costs and be faced with rising debts – a situation nobody would like to find themselves in.

Currently, about a third of people (31%) do not have any sort of emergency funds, whilst 23% say they don't know what they would do in the event of an emergency.

"As there are millions of Britons with less than six months worth of emergency financial provisions in place, it is clear that urgent action is needed, as well as a more realistic understanding about how you will survive should the main breadwinner become unable to work," commented Susan Barclay, head of marketing at Scottish Provident.

"We are urging everyone to start taking action now by following our easy steps to build your own personal financial safety net.

Having this in place will give you peace of mind that you and your family will be properly cared for and your standard of living will be maintained should you or a loved one become seriously ill, disabled or even die."

Here are four tips for creating a financial safety net:

  • Re-assess your emergency plan when big changes happen in your life, such as getting married, having children, buying a house.
  • Try to pay off large credit card debts as large bills during an emergency will only add to your worries.
  • Save as much as possible for a rainy day (over and above your regular savings). Put this money into a separate savings account that allows you instant access.
  • Make sure your next of kin knows of your emergency plan so that in the event that you cannot provide the details, they'll know what to do.

If you'd like to boost your rainy day savings, the Moneyfacts.co.uk Best Buy tables detail the best products in the market.

Find the best savings rates for you - Compare savings accounts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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