Worry at lack of ’emergency saving’


Published: Sunday 15th February 2015 by The News Editor

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One in three bank account holders has less than one month’s income put by to help them to cover emergency costs – despite the improving economy, a survey has found.

Savings levels remain low, with half (50%) of people surveyed having less than two months’ income put away, and 34% having less than one month’s income saved, according to the Lloyds Bank Savings Index.

The lack of emergency funds would leave many people in a vulnerable position if they had a sudden financial shock such as an emergency household or car repair.

Nearly half (48%) of people said they would need to have at least two months’ income in an emergency, while one in five (21%) would need four months’ income or more to cope financially. A further one in five said they do not know how much money they would need to cover an emergency.

Almost one fifth (19%) of those surveyed said they do have more than four months’ income as a savings buffer.

A lack of money at the end of each month remains a common reason for people saying they are unable to save, the research found.

The potential returns on offer in the savings market generally have remained poor in the low interest rate environment. But changes to Isa rules last year have enabled people to shelter more money away tax-free.

The Isa allowance for the 2014/15 tax year was increased to £15,000 and the 2015/16 Isa allowance, which will come into place in April, is £15,240.

While 84% of more than 3,000 people who took part in the survey between October and December last year agreed that it is important to save regularly, 82% said that they would rather pay off their debt before they start to save.

Philip Robinson, director of savings at Lloyds Bank, said: “With the lack of spare money at the end of the month a clear worry for consumers, it is reassuring to see such high levels of savers keen to put money aside for a rainy day.”

Published: Sunday 15th February 2015 by The News Editor

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