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Third of millennials would not survive financially for more than a month
New research from insurance company Liverpool Victoria has found that a third of millennials would not be able to survive financially for a month or less if they were to lose their job. The research looks into the financial stability of millennials based on the amount they owe and the amount they have saved currently.
As 55% of millennials have below the recommended level of savings suggested by the Money Advice Service. These figures are sure to be seen as quite worrying as the state of the economy continues to be uncertain. The Money Advice Service recommends having savings which will cover 90 days of outgoings should the worst happen such as being made unexpectedly redundant.
Those who rent or live at home are less financially resilient than those that own their own property in the 25-34 age group. 65% of renters have below the recommended savings level and 45% do not have enough money set aside to last longer than a month.
As rent prices continue to soar and house prices sit at around 7.6 times the average salary, it is difficult for those that are renting to set aside any money for a rainy day or to save for a deposit for a house.
The biggest obstacle to saving money was student debt with 40% of the 9000 people surveyed mentioning this; credit card bills followed closely after at 32%. Around 21% of millennials surveyed are in their authorised overdraft, twice the national average of 11% whilst 12% said they have a loan from a friend or family member, three times the national average of 4%.
As a result of these figures, the insurer is calling for the government to put in place a Single Financial Guidance Body (SFGB) which would focus solely on increasing financial resilience among consumers across the UK. With only 7% of millennials having income protection insurance, they are appealing for the government’s help to increase the number of those insuring themselves against financial shocks and instabilities.
Head of policy for protection at LV, Justin Harper, said; “We want the government’s new SFGB to have a specific focus on helping build UK financial resilience. It’s vital that more is done to encourage individuals and families to prepare and protect themselves against the consequences of accident, sickness, or disability.”
So what can millennials do to protect themselves against the worst when it comes to their finances?
- Save little and often – Even if you can only afford to put away a fiver a week, it is better than nothing. Save as and when you can to start building up your savings pot, if possible also try to set up a direct debit to go to your savings account just after you have been paid to get you in the savings habit.
- Open an ISA – There are a number of different ISA’s available on the market and they are a great way to save money tax free which protects the money you put in there. There are limits to the amount of money you can add to the account per year but if you lock your money away for a year or two the interest you could earn is better than other rates available at the moment.
- Take out income protection insurance – This is long term insurance which is designed to help you if you can’t work because you are ill or injured. It gives you the peace of mind that you will continue to receive a regular income until you are able to retire or return to work. For the most appropriate type of insurance cover for your circumstances speak to an Independent Financial Adviser.
- Cut back and look to earn more – Cut back where you can from switching providers so you can save money on bills to spending less on food bills and discretionary spending. Also, look into earning a bit of extra money by looking for a better paid job, taking on a second role or selling items online to declutter and make some extra cash.
- Still struggling? Speak to a debt adviser – With savings levels this low, if you are struggling with your bills or an unforeseen circumstance has significantly affected your finances, get in touch with us. Our friendly, professional advisers can provide you with the help and guidance you need to get you back on the right path.