A third of the UK adult population are ‘living on the edge’ every day with no savings whatsoever, according to new research.
That amounts to 16 million Brits and the situation was further complicated by the fact 71% of households faced unforeseen costs last year.
The Money Advice Service discovered that these costs amounted to an average of £1,100 last year and their survey discovered that 46% of people are concerned about unexpected bills.
While personal loans are available to cover these situations, they can leave families in a situation where finances are being stretched to the limit.
A quarter of people said an unexpected bill would cause them to go into debt or to increase existing debt – showing how financial issues could arise.
The survey also discovered that loans to family members that need assistance form the most expensive unforeseen costs – throwing hundreds of financial budgets of course.
More than one in ten households unexpectedly lent money to friends or family in 2013, with the average amount totalling about £2,500.
The lack of savings is a point of concern for the Service, especially as 34% said unexpected bills has a “big impact” on their finances in 2013.
Of the major unexpected costs, car repairs led the way with 29%, while optician’s bills and technology repairs both took 15% of the vote.
Just over a quarter if people questioned said they could save money on a monthly basis although two in five adults said they hadn’t been able to do so during the past six months.
Over a third of Brits who did have savings have said their pots have shrunk during the past year while this figure rises to 46% for those approaching pension age (55-64).
Three-quarters of people said a lack of a high enough income was the major issue to a lack of saving while 32% said saving was not possible once rents, mortgages and bills were taken into account.
“These results highlight the financial and emotional strain that just one unforeseen emergency bill can bring,” said Caroline Rookes, CEO of the Money Advice Service.
“With millions of homes experiencing unexpected costs of over a thousand pounds each year, it’s vital people know how they might cope.
“We urge everyone to plan for ‘rainy days’ and build up a buffer to cover unforeseen costs. Even a small pot will help you cope with the shock of the unexpected and ease the strain.”