It seems that we know we need to prepare for the proverbial rainy day, but too many of us have failed to put aside enough money to cope with a sudden mini-crisis.
On average, people reckon they need £1,200 put aside for emergencies, but about 60% of us have less than £1,000 saved up – and a quarter have no slush fund at all.
A third of people will rely on credit cards in an emergency. These can prove handy at the time, but high interest rates can cause subsequent problems for people who are unable to pay off their balances.
Perhaps more worryingly, the definition of a “rainy day” has changed. Traditionally, these unexpected events included leaky roof, a car problem or a broken freezer. But according to the research by Gocompare.com, more than 10% of people now classify paying the rent, being able to afford a large shopping bill and meeting a credit-card commitment as a rainy day. These are all things that should be part of a standard household budget – not unexpected emergencies.
“It’s worrying to see how many consumers have absolutely nothing saved up for a rainy day,” said Matt Sanders, of Gocompare.
“The old rule of thumb was that you should aim to have at least three months’ salary set aside for emergencies, but nowadays it seems most people are struggling to save three weeks’ wages, let alone three months’.”
He added: “Paying a large shopping bill, car insurance premium or energy bill, for instance, aren’t things that come out of the blue, so although they can sometimes be higher than expected, good budgeting should prevent these sorts of expenses putting a strain on your finances.”