Millions of Brits may be heading towards disaster, as many admitted to Zurich that they would not be able to handle any type of financial shock or loss of income. This kind of pressure could be affecting current mental health, as well as possible futures.
Zurich's report found that 34% of UK adults would not be able to recover quickly from an unexpected financial shock, with a further 15% having no idea whether or not they would be able to cope. What's more, 24% have no savings to fall back on, and a similar number (26%) do not feel in control of their life.
To be able to feel financially resilient, 37% said they needed to have savings, while 22% thought it was important not to be in debt and 17% said they would require a secure job. When it comes to earnings, 33% said that between £1,000 and £2,000 would be enough to help them feel financially resilient, but 18% required a monthly income of £2,000 to £4,000 to feel secure.
With the national average net income at £1,278, according to the Office for National Statistics, some adults could be earning less than what they need to feel resilient. This, combined with a lack of savings, could see them struggle significantly should something bad befall them.
Despite this, only 11% have income protection, which means the vast majority would have to rely on their own savings, their family, employers or the Government should they fall ill or be involved in an accident. "The most valuable asset we have is ourselves and our ability to generate an income," Rose St Louis of Zurich UK commented. "Therefore, it's a concern that nine in 10 are likely to prioritise insuring their mobile phone over themselves," as 18% would insure their phone over their income.
Additionally, many said they would struggle to make any financial sacrifices should they need to, with giving up their home the most difficult sacrifice, followed by giving up their car. Yet this could be avoided by getting income protection now, or starting a savings pot – for instance a regular savings account or simply an easy access account – or even doing both.
Don't wait for disaster to strike. If you're worried about the future, you'll want to do what you can to put back-up plans in place, if only for peace of mind. Then, if you find yourself in retirement with an extra emergency savings pot (maybe six months' pay) that you've never had to use, that just means you'll be able to go on a really nice holiday or have some extra funds to renovate your home.
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