A recent survey has found that the normal working person in the UK has around a month’s worth of savings to be able to sustain their current lifestyle should their income cease without notice. The data gathered from 2,000 people found that the average person’s savings would support them for 32 days.
More worryingly, 26% of those who answered said their savings would only last a week or less. 22% said they had less than £500 in savings, whilst 23% admitted to having no savings to support them at all. The findings suggest that those in Northern Ireland have savings which would last the longest, with an average of 36 days’ worth of money put away. Workers in Wales, meanwhile, have an average of just 26 days of savings to support them.
Whilst most people have emergency savings to help them with smaller one-off unanticipated costs, such as replacing or fixing a home appliance, the likelihood of finding yourself without a source of income should not be regarded as an impossibility. Splitting up from your partner, losing your job or having a serious accident can happen without warning and most people will need some time to help regain some financial stability. The majority of financial advisers suggest having a minimum of six months’ worth of salary put away in case of an emergency so that you don’t find yourself without anything to fall back on.
However, an emergency fund should be just that: money readily available for when you suddenly need cash to pay for an unforeseen extra cost. If you have more than six months’ worth of salary in a current or instant access savings account then you’re likely to be missing out on the opportunity to make your savings work for you in an account that’s less easy to access but offers a better rate of interest.
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