Half of people have no money to fall back on, research finds

POSTED: 12th March 2013
IN: Personal News

Savings are an integral safety net to keep people afloat in the event they suffer a sudden job loss or face unexpected costs they did not budget for.

undefinedHowever, a survey of 2,000 adults from British challenger bank Aldermore has revealed half of people would be in financial difficulty if they lost their job.

The research revealed one in ten respondents have never put money aside for anything, while nearly a quarter admitted to "rarely" saving.

"Having absolutely no resources is very high risk indeed," said Simon Healy, managing director of savings at Aldermore. "If one of the earners in a household were to lose their job and not be able to maintain mortgage or rent payments it would only be a matter of time before things got difficult."

It is impossible to predict what might occur to place a sudden strain on the household finances, but without the appropriate provision in place, people are likely to struggle.

As the Aldermore study found, one in 20 respondents with savings have just £200 in the bank, which is insufficient to cover average monthly household outgoings of £1,105.

Taking into account the cost of council tax, a TV licence, energy bills and other expenses, it is highlighly important for households to have savings in place to tide them over for at least a month ahead.

"People are feeling the squeeze at the moment but even so, it would be best to calculate how much you can afford to realistically put away after you have paid all your necessary outgoings," Mr Healy explained.

The expert added that by putting aside just £20 a week, an individual can build up a pot of £1,040, which could cover the cost of two mortgage or rental payments for the average person.

A tax-efficient option for savers is a cash ISA, which enables people to earn tax-free interest to ensure their savings are working as hard as they can. 

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