Banking, loans and cards

‘Millions of households have no savings for a rainy day’

Startling statistics suggest that millions of households have virtually no financial safety nets and would struggle to meet their commitments if they ran into unexpected problems.

Research by HSBC suggests that a third of people have no more than £250 set aside for emergencies.

A quarter of those surveyed have nothing put aside at all. Based on the average outgoings of UK households, even those who have £250 in emergency funds would find it lasted only four days.

Just as worryingly, a third of those who were asked admitted they would not be able to pay their mortgages if they lost their jobs – and this situation could get even worse when interest rates eventually rise again.

Debbie Thomas, head of savings at HSBC, said putting aside even a small amount each month could help alleviate the situation.

“Our research paints a worrying picture of the UK’s savings,” she said.

“But the good news is that it’s easy to start a regular savings habit. If you put aside £50 each month, you’ll have saved £500 by Christmas, plus the interest you’ve earned. That works out at just under £12.20 per week – whether you cut back on coffees, cocktails or get thrifty with vouchers and coupons, small changes genuinely do make a big difference over time.

“Making sure you have a sufficient financial safety net is crucial. This cuts the risk of running into financial trouble should you lose your job or be unable to work, and means you don’t have to resort to methods that could leave you in debt.

“As a general rule, a minimum of three months’ salary makes for a solid financial back-up.”