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Save for the unexpected

Save for the unexpected

Category: Savings

Updated: 31/01/2014
First Published: 31/01/2014

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 It is now over 6 months old so the content may be out of date.

Life is often peppered with unexpected events, sometimes of the unwelcome kind – the sort that hits the pocket.

However, it turns out that a fifth of UK consumers do not know how much they should be putting aside to deal with a surprise emergency, according to the latest Lloyds Bank Savings Report.

The advice is that people should have at least three months' worth of essential outgoings available to them. You should work out what you spend each month on mortgage or rent, food and heating bills, as well as any other things you can't live without; then times this by three – that's the buffer you should be aiming to have within easy reach.

This amount should be kept in an easy access account so you can get hold of it quickly if the need arises. Further savings could perhaps be put away in a notice account, paying better rates of interest.

The research from Lloyds also shows that 15% of people have no idea how much they have in their savings account.

Over a quarter of consumers (29%) had to make withdrawals from their savings for unexpected outgoings in the last 12 months. However, others are dipping in for less essential things including holidays (28%), one-off purchases (18%) and day-to-day living expenses (18%).

Saving over the past year seems to have been challenging, with nearly a third (32%) of consumers not managing to save at all, but things seem to be looking up for the coming year.

Around 63% of people are expecting to save more over the next year, up from 58% last year.

Andy Bickers, savings director at Lloyds Bank, said: "Despite the abundance of financial information available to British savers, a significant proportion are still unaware of the amount of money they need to hold in savings to financially survive an emergency.

"However, it is reassuring to see an increase in the number of people expecting to save more in the coming 12 months, which should boost savings levels, giving them more security for when they need it most."

What next?

Take a look at our easy access accounts and put a little aside for emergencies

Compare our fixed-rate and notice accounts if you have any extra to tuck away

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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