The average number of days that someone in the UK would be able to survive on their savings if their income were to fall away is just 32 days – an appallingly short time for someone to find a new job, and that's not even thinking about those who may lose income due to sickness or the death of the main breadwinner.
The latest 'Deadline to Breadline' report from Legal & General has found not only that people would last just 32 days on average before they run out of money, but also that 23% of those surveyed do not save any of their income, which means these people could be on the breadline tomorrow if they were to lose their job today!
Admittedly, it's not the most inspirational time for people to be saving at present, what with savings rates below inflation and the amount of uncertainty surrounding the election and Brexit. And yet, this makes it all the more important to save as much as you can afford, to help you get through the uncertain times unscathed.
The survey found that households save an average of £321 per month, which is better than nothing, but still means that it would take eight years and four months to save up one years' average gross UK salary of £27,600. If something were to happen, such as your employer going bankrupt or the main breadwinner succumbing to a long-term illness, you usually only have months to readjust, if that. Certainly not eight years.
While people understand the importance of financial security, as 48% said their biggest worry in the event of a loss of salary or redundancy was being unable to pay the rent or mortgage, and 33% stated their biggest worry if affected by critical illness or disability being losing their home, they don't seem to be using this worry to prepare themselves.
Indeed, 30% of employees admitted to not having any back-up plans in place, with just £6,500 in savings on average compared to a household debt of £4,674. To get financially fighting fit, the first step anyone would need to take is to eliminate debt. That way, if something were to happen, there would still be room to take out a credit card to help pay the bills for a little while.
Next, it's time to save. There are still some decent savings accounts out there, especially if you're looking to put a bit away each month, in which case a regular saver could be ideal. If you're struggling to put some money aside each month, either to save or pay off debt, there is another option to consider: taking out insurance.
Aside from building up a healthy savings pot, there are several protection measures you can take. Income protection does exactly as the name implies – if you are unable to work due to redundancy or long-term illness (depending on the policy's criteria), income protection will pay out a percentage of your old income until you are able to work again. Additionally, these companies will usually help you get back to work as soon as possible, creating a win-win situation.
Other options are critical illness and life insurance, if you are particularly worried about getting sick or worse, and the effect this would have on your family. As such, it is probably unsurprising that the biggest trigger for people taking out protection cover is having a child (34%), followed by buying a property (25%) and illness (24%).
No matter your current lifestyle, it's always a good idea to ask yourself how you would survive if you were to lose your source of income for any reason, and to plan accordingly. Such peace of mind should never be underestimated.
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.