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Employee savings will only last a month on average
A new report from Legal and General has highlighted that the average employee only has enough money in their savings to maintain their current lifestyle for a month if they were to suddenly lose their income. The survey of 2000 people found that savings would last 32 days on average for employees across the UK.
This latest research has raised concerns that the UK is suffering from ‘a savings and protection gap’ which is harming the financial stability of many households up and down the country. This is highlighted when 26% of those surveyed said they would run out of their savings in a week or less and 23% said they have nothing set aside currently.
Northern Ireland and Eastern England fare the best when it comes to the amount of money they have to fall back on with 36 days’ worth of savings and 35 days respectively. Whereas Wales and South East England would struggle to see out a full month quoting 26 days and 29 days for their savings to last on average.
Many financial advisers recommend people have at least three months of salary to fall back on should something such as a redundancy occur and they find themselves without any money coming in.
Head of intermediary development for Legal and General, Richard Kateley, commented on the findings of this recent survey; “We merely rent our lifestyles and we pay each month for it through our earnings. Take away those earnings and it may not just be your house that you are thrown out of, but your entire lifestyle.”
It is thought that many of the people with little or no savings to fall back on are in low wage jobs and therefore struggling to meet their bills and debt repayments which makes saving even more difficult. However, there are ways that you can build up a savings fund on a tight income and deal with any debts you may have.
- Budget and save – If you don’t already have a budget, you should create one. Input your income and outgoings to see how much money you are spending, where you are spending it and where you could potentially cut back or look into saving on your monthly bills.
- Pay off debts – If you can, pay off your credit cards, loans etc. This will not only help your credit rating and release you from a potential financial burden but it will allow you to put the money you were using for debt repayment into your savings account to help you build up a fund to fall back on.
- Cancel unnecessary payments – Paying for the gym but haven’t been for months? Have a loyalty scheme or magazine subscription on your statement but can’t remember the last time you used it? Cancel them, you’ll be surprised at how you could end up saving yourself.
- Choose a high interest savings account – Although, interest rates aren’t great at the moment, you may still be able to get a good deal on your savings rate. Locking money away in an ISA or looking beyond high street banks for your savings account could be the key to finding an interest rate that offers you a much better return on the money you are investing.
- Debt troubles? Help is available – Get in touch with us on 0800 901 2488 and our friendly, professional advisers can offer you the help you need and talk you through the options you have available to you.