Research highlights the UK’s fragile finances with too few people saving enough
10 June 2019
A quarter (26%) of people in the UK could cope less than a month[i] financially if they had to rely on their savings to cover their outgoings, new research reveals.
Figures released by Yorkshire Building Society today (Tuesday 11 June) highlight just how fragile many people’s financial situation is, with one in ten (11%) expecting their savings to last just a few days, and almost one in seven (15%) admitting they have no savings at all.
This contrasts with guidance from the Money Advice Service that recommends people have a savings cushion to cover three months’ essential outgoings in case of emergency, such as losing a job[ii]. The Yorkshire found just two in five (42%) people could rely on their savings for at least three months.
Despite the challenges to save, including rising living costs, the research also highlighted considerable social pressures to spend rather than put money away.
Almost half (49%) of those surveyed felt pressure to spend money as a result of what they see on social media, and a third (33%) feel they need to spend to keep up with family and friends.
Additionally, two in five people (43%) admit they regularly spend money on impulse purchases they later regret and would rather have saved, with one in seven (14%) saying they’ve spent more than £500 in the last year which they instead now wish they had in their savings.
Mike Regnier, chief executive of Yorkshire Building Society said:
Our research highlights just how fragile many people’s finances are. While it can be hard for people to put money away, we mustn’t overlook the social pressures people come under to spend rather than save.
Anyone could find they need to turn to their savings at any time, which is why we want to help people build a healthy savings pot to protect themselves from financial shocks and make the most of life’s opportunities, without having to rely on credit or debt.
Now more than ever, in the current economic and political uncertainty, it’s important to build financial resilience and help people to save.
Higher earners were almost as likely to struggle to live off their savings without an income as those on the lowest wages. Two in five (43%) people earning more than £100,000 say that without a job they wouldn’t be able to cope financially longer than three months, compared with 51% of workers at the bottom end of the pay scale earning less than £15,000 a year.
The Yorkshire surveyed[iii] people across the country as part of its ongoing campaign to improve financial resilience – with a goal of getting an additional 1.8 million non-savers to start putting money away over the next five years.
Of the almost 11m people in the UK aged 16-64 who do not save, Yorkshire Building Society estimates 7.5m are in work[iv]. Data also shows the household savings ratio has reached a record low, with households now saving just 3.8 per cent of their disposable income, down from 10% in 2015 and a high of 14.7% in 1993.[v]
Additionally, the UK sits 19th in a European league table of saving[vi], supporting the call to improve the population’s financial resilience.
The Yorkshire has laid out a range of proposals for Government to support, including funding a regional trial to incentivise workplace saving and implementing financial well-being measures across the civil service.
It is also encouraging employers to treat employees’ financial health in the same way as physical and mental well-being by providing support and schemes where employees can save directly from their salaries.
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All information correct at time of publication.
[i] Yorkshire Building Society Financial Resilience survey: 26% of respondents said they could live off their savings for no more than three weeks if they had to rely on money they’ve put away
[ii] Source: The Money Advice Service suggests ‘a good rule of thumb to give yourself a solid financial cushion is to have three months’ essential outgoings available in an instant access savings account.’ https://www.moneyadviceservice.org.uk/en/articles/emergency-savings-how-much-is-enough
[iii] The research was carried out online by Research Without Barriers – RWB. All surveys were conducted between 8th May 2019 and 14th May 2019 and the sample comprised 2,014 UK adults. All research conducted adheres to the UK Market Research Society (MRS) code of conduct (2014) RWB is registered with the Information Commissioner’s Office and complies with the DPA (1998)
[v] Source: Office of National Statistics, Household Savings Ratio: 3.8% 2018, Q3 compared with 3.6 1963, Q2.
[vi] Source: European Commission – Eurostat - Annual key indicators by Member States - Households
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