According to research conducted by MoneySupermarket, almost half of under 25s have no savings at all, with nearly a quarter of over 65s also found to have zero savings to help them cope with the current cost of living crisis.
A further 22% were found to have less than £2,000 in savings.
Not only did the survey uncover trends relating to age and savings, but also some stark regional divides across the UK. For instance, those living in the Midlands were found to be the most likely in the UK to not have any savings at all.
East Anglia was found to have the highest savings level at £6,449 on average per person, with the North East only having £2,661 saved per person, with a third having less than £2,000 put away in their savings accounts.
The research did however reveal that overall, around three quarters of UK citizens do have some measure of an emergency fund saved. It was further revealed that half of which were certain that they would need to dip into this fund as inflation has begun to spiral.
The findings from MoneySupermarket’s survey align similarly to trends recently published by the Bank of England showing savings to have plummeted. For example, the combined net flow of savings in both deposit and NS&I accounts in June stood at £1.9 billion, a fall from £5.6 billion in May.
Furthermore, it found that over half of UK citizens are certain that they will need to dip into their savings this year, with an average of £1,672 expected to be used towards unexpected costs – amounting to nearly 30% of what the average UK citizen has in their savings account.
In response to these findings, personal finance experts have stressed the importance of ensuring that households have a ‘rainy day fund’. This refers to easily accessible money which can act as a financial cushion to deal with unforeseen events. It should typically cover between three to six months worth of basic living expenses.
Personal Finance Expert at MoneySupermarket, Jo Thornhill said that “as we face the cost of living crisis, any unexpected financial costs or emergencies could have a devastating impact on many households’ finances.
A car or boiler breaking down could wipe out what savings many Brits have and leave people unsure where to turn for help.”
As the cost of living crisis worsens, more and more UK citizens are expected to either make dramatic changes to their spending habits, or borrow to fund this.
According to a recent study conducted by TransUnion, almost half of UK citizens have decided to cut back on spending in order to cope, with over half reducing their expenditure over the past three months.
For the quarter of UK citizens that do not have any savings, borrowing is more likely, with two in five likely to use their credit while others will resort to personal or bad credit loans. Around a quarter of under 35s said that they would resort to payday loans in instances of an emergency too.
This aligns with trends seen last month, with UK households borrowing an additional £1.8 billion in credit in June, doubling figures of £900 million of borrowing in May.
This exceeds the pre-pandemic average from February 2020 of £1 billion of borrowing every month.
Managing Director of Consumer Interactivity at TransUnion, Kelli Fielding, said that there has been a concerted effort being made by UK consumers to cut back spending.
With continuing financial pressure amid the rising cost of living, it’s more important than ever that people remain diligent about their credit and put into practice healthy habits such as making payments on time, checking their credit information and keeping an eye on their credit score.
This will help them stay in control of their financial wellbeing and help to ensure they can access finance if needed.”
