Over a third of Britain’s workforce has less than month’s salary in savings, new research from Neyber has found.
The study, carried out among 10,000 UK employees, found that almost one in seven (14 per cent) of working Brits have no savings whatsoever.
This savings shortfall means that many people in the UK would be unable to cope with an unexpected income shock, such as divorce, bereavement, redundancy or illness.
Heidi Allan, head of employee wellbeing at Neyber, said: “With so little money to fall back on, something as simple as a car repair could leave people struggling to cope.
“It is critical that people have some way of paying for smaller things like unexpected bills, as well as protection policies in place for bigger problems such as losing a job, otherwise small income shocks could lead to Britain’s workers spiralling into debt.”
The research found that most Brits had experienced difficult situations in the past two years. These ranged from mental health issues (18 per cent) to divorce (14 per cent), serious accidents (8 per cent) and job loss (19 per cent).
Despite this, many Brits have no immediate plans to address their lack of savings. Almost a fifth (18 per cent) are not setting aside any of their monthly earnings.
For lower earners (those with salaries between £10,000 and £19,999) that figure is far higher, with 26 per cent of people saving nothing whatsoever out of their wages.
Those who do save were putting aside £310 a month on average. The 65+ group saved the most, putting aside £350 a month, while 45-54 year olds saved the least, putting aside just £282 a month.
The average pot among those who do save is £10,468.06.
The most common way to save was in a bank or building society – over half of the 10,000 people surveyed saved in this way. But just under a quarter of people had savings in a jar at home.
Different ways of saving
A bank or building society savings account 52%
A pension 39%
A personal ISA 34%
A savings jar at home 23%
I don’t regularly save / Not applicable 23%
Stocks and shares plans 13%
A credit union 5%
A company or employer ISA 4%
An employer-sponsored savings account 4%
Top tips for managing money
With almost a fifth of people not saving any of their monthly income, Neyber’s Heidi Allan has identified seven top tips for getting on the savings ladder.
Seven top tips for saving
1) Set up a standing order – Put savings in a separate account from everyday money, it will stop you dipping into your savings for impulse buys or on a night out
2) Find the right savings account for you – important things to consider are whether you will need to access your money in the near term, the interest rates on offer, and any penalties if you take your money early
3) Name your accounts – if your saving account is called ‘holiday fund’, psychologically you’re less likely to dip into it, because you’re more likely to make the connection that money now means less spending money while you’re away.
4) Have clear objectives – knowing what your goals are and how much you need to put away makes it far easier to achieve than just thinking ‘I should save more’
5) Be realistic with what you want to achieve – just like New Year’s Resolutions, if you bite off more than you can chew, you’ll fall at the first hurdle. Think reasonably about what cut backs you can make and come up with achievable goals
6) Be realistic with your timescales – you’re probably not going to go from saving nothing to saving £1,000 a month, but if you can manage £20 a week, you’ll save well over £1,000 in a year.
7) Be open and communicate – It can be really frustrating when you’re trying to cut back but friends and family are tempting you out on expensive days out or for nice dinners. Tell people if you’re saving for something big. They might be too, and even if they aren’t they’ll understand and it makes it easier to suggest lower-budget activities.
Neyber’s full report – the DNA of financial wellbeing – can be found here.